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HIST  O  R  Y 


OF 


THE  BANK  OF  ENGLAN 1), 


ITS   TIMES   AND    TRADITIONS, 


From   l(il)4  to   1844. 


BY    JOHN    FRAISTOIS. 


KlIWT  AMBKICAN  KDITION,   WITH  NOTES,   APDITIONS  AND   AN   APPEXDIX,  INCLUDIKQ    BTATI8TIC8  (JP 

THK   BANK    TO   THE  CLOSE   OF    THi:   YEAR    1861,    AND    STATISTICS 

OF    BKITISII    KINAXCER,    CUURENCT,    &C. 


BY     I.    SMITH     HOMANS, 

Editor  of  the,  '•  Boiiker'K  Magazine.'"' 


Ncra    IDork : 

PUBLISHED    AT   THE   OFFICE   OP   THE    BANKER'S    MAGAZINE 
ANO   80l.n    BY   G.  p.   Putnam,    and    isy   S.   Tousky.    N.    Y. 

1862. 


F1^ 


PREFACE    BY    THE    AMERICAN    EDITOR. 


A  History  of  ''  The  Bank  of  I'^ngland"  it?  noccssarily  a  history  also  of  the 
financial  movements  of  Great  Britain  during-  tlic  one  hundred  and  fifty  jears  now- 
passed.  The  volume  of  ilr.  Francis  contains  much  that  is  both  interesting  and 
important  as  to  the  banking  and  currency  features  of  the  last  and  the  present 
century,  as  well  as  of  the  \arious  crises  tlaat  have  disturbed  European  States: 
the  loans,  voluntary  and  forced,  to  tliose  governments,  and  the  rise  and  fall  of 
paper  money  at  different  times. 

To  the  American  edition  have  been  added  a  sketch  of  tlie  important  financial 
movements  and  commercial  operations  of  the  sixteen  years  ■which  followed  tlie 
last  charter  of  the  Bank  of  Etigland ;  also,  elaborate  tabular  statements  of  tlie 
condition  of  the  bank  during  the  last  sixty  years  ;  opinions  lield  by  prominent 
statesmen  and  financial  writers  as  to  the  principles  of  the  currency,  and  tiic 
connection  of  the  government  with,  and  ils  vi-sponsibility  for,  the  control  of  the 
banking  movements  of  the  period. 

England,  France  and  the  United  Stales  Inu »•  >e\ cially  suffered,  and  severely, 
from  the  financial  revulsions  of  the  past  sixteen  years.  The  intimate  connection 
of  our  government  with  the  currency,  during  the  years  ISGl  and  1862,  has  led  to 
the  republication,  at  this  time,  of  the  present  work.  As  a  matter  of  history,  the 
editor  has  no  doubt  that  the  present  contribution  will  be  acceptable  to  that  large 
class  of  legislators,  merchants  and  bankers,  who  mainly  control  tlie  finiiucial 
movements  of  the  country. 

New-York,  Jnne,  1862. 


HISTORY  OP  THE  BANK  OF  ENGLAND. 


By    John    Fbancis. 


J^ret  American  Edition — with  Notes  and  Additions, 


CONTENTS. 

Page 

Inteoductiox. — Chap.  I. — Invention  of  Bills  of  Exchange — Interest  Forbid- 
den— Neapolitan  Lending-Houses — Defence  of  the  Hebrew-^Necessity  of 
Henry  III. — Success  of  the  Hebrew — Bank  of  Venice — The  Lombards  in 
England — Their  Persecution — Complaints  against  them — English  Compa- 
nies— Advance  in  Commerce — Route  to  China — Abolition  of  Foreign 
Loans, 13 

Chap.  II. — Danger  of  Chaeles  I. — Seizure  of  the  Merchants'  Money — Royal 
Exchanger — Abolition  of  the  Office — The  Hebrew  in  England — Hostility 
to  the  Hebrew — The  Protector's  Descent — Goldsmitli's  Notes — The  First 
Banker — Difficulties  of  Cuakles  II. — Exaction  of  the  Goldsmiths — First 
Run  on  the  Bankers— Expedient  of  Clifford — Panic  in  the  City — Public 
Indignation — Interest  allowed,  ........     22 

Chap.  III. — National  Bank  required — Bank  of  Credit — Speculation  in  1694 — 
Bubble  Companies — New  River  Company — Bank  of  England — William 
Paterson' — Buccaneers  of  Darien — Scottish  Enthusiasm — Paterson's  Lib- 
erality— The  Darien  Expedition — Its  Failure, 30 

Chap.  IV. — Opposition  to  the  Bank — Scarcity  of  Supplies — Distress  of  the 
Army — Varying  Opinions — Establishment  of  the  Bank — Analysis  of  the 
Act^Bank  at  Grocers'  Hall— Beneficial  Effects— Trial  of  the  Bank— Will 
of  the  Bank — Death  of  the  first  Deputy-Governor — Jealousy  of  the  Gold- 
smiths,       .............     38 

Chap.  V. — Suspension  of  the  Bank — Its  Notes  at  a  Discount — Commencement 
of  Stock-Jobbing — Extension  of  the  Charter — Accusations  against  the  Di- 
rectors— Their  Defence — Attempt  to  injure  the  Bank — Proposals  for  Branch 
Banks — Projected  Invasion — Run  upon  the  Bank — Assistancerendered,    .     47 


ir  Contents. 

Chap,  VI. — Privileges  of  the  Bank  renewed  and  extended — Disgraceful . Trans- 
actions of  the  Mine  Adventurers'  Company — Bank  Capital  increased — The 
Sacheverell  Riots  and  proposed  Attack  on  the  Bank — Importance  of  the 
Bank — Run  upon  the  Bank — Renewal  of  the  Charter — Reduction  of  Inter- 
est— First  Subscription  to  Government  Loans, 53 

Chap.  VII. — The  Mississippi  Company — Financial  Difficulties — Royal  Bank — 
Privileges  of  the  Company  of  the  West — Infatuation  of  all  classes — In- 
crease of  Luxury — Count  Van  Horn — Murder  of  a  Stock-broker — Enor- 
mous Profits — Demand  for  Specie — Panic  commences — The  Bank  besieged 
— ^Unpopularity  of  Law — Destruction  of  the  Company,     .         .         .         ,59 

Chap.  VIII. — South  Sea  Bubble — Its  Commencement — Rivalry  with  the  Bank 
of  England — Luxury  of  the  Period — New  Companies — Extracts  from  con- 
temporary Literature — Royal  Exchange  and  London  Assurance  Corpora- 
tions— Bank  Contract — Panic  of  the  People — Parliamentary  Inquiry  and 
Punishment  of  the  Peculators, 67 

Chap.  IX. — Purchase  of  South  Sea  Annuities — Increased  Capital — Commence- 
ment of  the  Rest — Conspiracy  and  Run  upon  the  Bank — Confidence  Re- 
stored— Advances  to  Government — New  Building — Origin  of  Post  Bills — 
New  Charter — Invasion  of  1745 — Run  upon  the  Bank — Expedient  to  meet 
it — Attempt  to  Injure  Credit — Assistance  to  Government,  .         .         .80 

Chap.  X. — The  first  Forged  Note — Legal  Decision — Issue  of  Notes — New  Char- 
ter— Great  Panic  and  Failure  of  Bankers  in  1772 — The  Gordon  Riots — Con- 
fusion of  the  People — Suspension  of  Trade  in  the  City — Attack  on  the  Bank 
— Its  Repulse — Behavior  of  Wilkes — Extraordinary  series  of  Forgeries — 
Detection  of  the  Forger — His  Fate — ^Morland  the  Painter — Liberality  of  the 
Directors, .         .         .         .91 

Chap.  XI. — Legal  Opinion — Abolition  of  Tallies — Forgery — Extension  of  the 
Charter — Opinions  of  Lord  North — Increase  of  Capital — Legal  Decision 
concerning  Forged  Notes — Stamp  Duties — National  Debt — Curious  Anec- 
dotes— Fraud  and  Forgery — Unclaimed  Dividends — Distress  of  1793 — 
Issue  of  Ex'chequer  Bills — Loyalty  Loan, 102 

Chap.  XII.— "Historical  Sketch  of  the  Cessation  of  Cash  Payments— Applica- 
tion of  Mr.  Pitt — Assistance  rendered  by  the  Court  of  Directors — Diminu 
tion  of  Discounts— Political  Position  of  the  Country— Drain  of  Bullion,     .   113 

Chap,  XIII. — Order  in  Council— Suspension  of  Cash  Payments— Meeting  of  the 
Merchants— Parliamentary  Debates— Issue  of  Dollars — Enlarged  Dis- 
counts required— The  Restriction  Act  passed— Issue  of  One  and  Two  Pound 
Notes— Bank  of  France— The  Rest— Renewal  of  the  Charter— Ojnnion  of 
Mr.  Pitt  and  other  Ministers^     .  .        .         ..         .         .121 

Chap.  XIV.— Increase  of  Forgery— Bonus  on  Bank  Stock— Addition  to  the  In- 
come of  the  Clerks— Truce  of  Amiens— Continuance  of  the  Restriction  of 
Cash  Payments — Fraud  of  Robert  Astlett— Renewal  of  tlie  War — Issue 
of  Dollars— Berlin  Decrees— Finance  Committee— Its  Result— Acr ah aju. 
Newlanij — Forgeries,         .        .        .        .  .        .        .    '    .        .132 


Contents.  v 

Chap.  XV. — High  Price  of  Bullion — Bullion  Committee — The  Report — Finan- 
cial DifRculties — Loan  of  Exchequer  Bills — Mr.  Horner's  Motion — Mis- 
chievous effect  of  the  Bullion  Report — Motions  of  Mr.  Vaxsittart  and 
Lord  Staxhope — Letter  of  Lord  Kixg  to  his  Tenantry — Rise  in  the  value 
of  the  Dollar — Stock  Exchange  Fraud, 1  t.S 

( 'iiAP.  XVI. — Peace  of  1815 — Continuation  of  Restriction — Commercial  DifiRcul- 
ties — Bonus  on  the  Capital — Partial  Resumption  of  Cash  Payments — Le- 
gal Decisions — Mr.  Peel's  Currency  Bill — Return  to  Cash  Payments — The 
Dead  "Weight — Pension  List — Diminution  of  Dividend — Forgery  of  Faunt- 
LEROY,  .  .  .  .  .  .  .  .  -  .  .  .  .    loS 

Ch.\p.  XVIL — Prosperity  of  the  Country — Reduction  of  Interest — Circulation 
of  One  Pound  Notes — Foreign  Loans — Eagerness  to  subscribe — High  Price 
of  Shares — Delusive  Companies — History  of  the  Peruvian  Loan — Remarks 
in  the  House  of  Commons,  .        .         .         .         .         .         .         .         .18:3 

Chap.  XVIII. — Bubble  Companies — Abundance  of  Money — Increase  of  Pros- 
perity— Commencement  of  the  Panic — Failures  of  Country  and  London 
Bankers — Panic  in  London — Scene  at  the  Discount  Office — Great  Distress 
— General  Discredit — Demand  for  Gold — Comments  of  "  Tlie  Times" — 
Riots  in  the  Country — George  Canning — Mr.  Rothschild — Assistance  of 
the  Bank — Issue  of  One  Pound  Notes — Anecdotes  of  the  Panic — Opinions 
of  the  Cause, 189 

Ch.\p.  XIX. — Effects  of  the  Panic — Alteration  in  the  Charter — Parliamentary 
Debates — Opinions  on  the  Currency — Assistance  to  the  Mercantile  Inter- 
est— Table  of  Advances — Legal  Decision — Extension  of  the  Branches — 
Jealousy  of  the  Country  Bankers — New  Three  and  a  Half  Per  Cents — Uses 
of  Bank  Notes — Danger  of  the  Bank — Its  Origin — Run  upon  the  Bank — 
Political  Causes, - 1 1 

Chap.  XX. — Forgery — Endeavor  to  prevent  it — Committee  Appointed — In- 
crease of  the  Crime — Sir  Samuel  Romilly  and  Sir  James  Mackintosh — 
Progress  of  Opinion — Petition  of  the  Bankers — Incfficacy  of  the  Punish- 
ment— Instance  of  it — Forgeries  of  Bonaparte,  .         .        ' .         .  227 

Ch.\p.  XXI. — The  New  Charter— Its  Conditions — Extraordinary  Discovery — 
Holidays  Abolished — Failure  of  the  Governor — London  and  Westminster 
Bank — Speculations  in  18GG— Panic— Demand  for  Bullion — Its  Cause,        .  233 

Chap.  XXII. — Loss  of  the  Northern  and  Central  Bank — Application  for  As- 
sistance— Stipulations  Demanded — Directors  at  Manchester — Private  Led- 
ger— Application  of  Mr.  Frcshiield — Its  success — Curious  Discoveries — 
Failure  of  Esdaile  &  Co. — Alarm  and  Assistance  of  the  Bankers — Difficul- 
ties of  American  Houses — Suspension — Foreign  Credit — Drain  of  Gold — 
Restoration  of  Confidence — New  Mode  of  JIanifolding  Bank  Notes, .         .  243 

Chap.  XXIII. — Exchequer  Bill  Forgeries — New  Discovery — Legal  Decision — 
Internal  Alteration  in  the  Circulation  and  National  Debt  Department — 
Great  Continental  Conspiracy — Its  Development  and  Discovery — Fate  of 
the  Perpetrators — Tribute  to   "  The  Times," 2.5'/ 


vi  Contents. 

(  'hap.  XXIV. — Tlie  Income  Tax — Its  Payment  on  Annuities — The  Bank  Char- 
ter Act  of  1844 — Its  Provisions — Siicuch  of  Sir  IIobkrtP£EL — Jones  Lloyd 
— Tlie  Country  Bankers — Petition  of  the  London  I^ankers — Its  Result — 
Xe\v  Arrangements — Will  Forgeries,  .......  2*72 

(  11  \r.  XXV. — Fortunate  Discovery — Forgery  of  Burgess — Escape  to  America 
— Tlie  Pursuit — Romantic  Events — Railway  Mania — Its  Progress  and  De- 
velopment, ............  287 

Cu.w.  XXVI. — Traditions  concerning  the  Bank — Stolen  Notes — Stratagem  of 
the  Duke  de  Cuoiseul — Lost  Note — Description  of  the  Bank — Weighing 
Machine — Internal  Arrangements,      ........   300 


APPENDIX 


Bank  Shares,  Bank  Dividends,  Consols — Tabular  Statement,  showing  tlie  low- 
est and  highest  market  rate  of  the  Bank  of  England  Shares,  from  l^Sl  to 
]  860 ;  the  rate  of  Bank  Dividends  semi-annually  during  the  same  period, 
and  the  lowest  and  highest  prices  of  Consols  during  each  year,  .     .    .  313 

'i'lie  London  Joint-Stock  Banks,         .         .         .         .         .         .         .         .         .315 

Tabular  Statement,  showing  the  Circulation,  Deposits,  Loans,  Bullion,  Reserve 
and  Rest  (Sur2:>lus  Profits)  of  the  Bank  of  England  at  the  close  of  Febru- 
ary, each  year,  from  17*78  to  1840,  and  at  the  end  of  March,  from  1841  to 
1844, 317 

The  origin  of  the  Bank  of  England.  By  T.  B.smngton  Mac.vlj.av.  From  Mac- 
aulay's  fourth  volume  of  the  History  of  England. — I.  Financial  Difficulties 
of  the  Year  1C93.— II.  The  Lottery  Loan.— III.  Private  Bankers  of  the 
Seventeenth  Century. — IV.  Opposition  to  the  Private  Banking  System. 
— V.  First  Suggestions  for  a  National  Bank. — VI.  The  Laud  Bank. — VII. 
Insecurity  of  Land  as  a  Basis  of  Currency. — VIII.  William  Patteeson, 
the  Originator  of  the  Bank  of  England. — IX.  His  Plan  for  a  Bank. — X. 
Consummation  of  the  Act — its  complete  success,         .....  319 

A  Visit  to  the  B.-Jik  of  England,  1849.     From  Hogg's  Weekly  Instructor,         .  329 

Tlie  Bank  of  England,  1844-1861.  Statement  showing — I.  The  Circulation 
Outstanding. — II.  Public  Deposits. — IIL  Private  Deposits. — IV.  Public 
Securities  held. — V.  Other  Securities. — VI.  Bullion  and  Coin  held. — ^VII. 
Reserve  of  Notes :  at  each  period  when  a  change  in  the  rate  of  discount 
was  adopted  by  the  Bank,  .........  330 

Directors  of  the  Bank  of  England,  from  1694  to  1861 340 


Contents.  vii 

Crovernor,  Deputy-Governor  and  Directors  of  the  Bank  of  England,  elected 

xVpril,  1861,  with  the  dates  when  they  were  respectively  elected,  .  34;j 

Duties,  Qualifications,  «tc.,  of  the  Governor  and  Deputy-Governor,    .  .          .  344 

Of  the  National  Debt  of  Great  Britain.     By  T.  Babixotox  Macaui;av,  .          .  ;J45 


THE  HISTORY  OF  THE  BANK   OF    ENGLAND, 

FuoM  THE  Xew  Chauteu  (1844)  to  the  year  1801. 

CuAPTER  I.  — General  Remarks — Sir  Robert  Peel — Depression  of  Engii.^h  Trade, 
1841-1843 — The  Importance  of  the  United  States  as  a  Market  admitted  by 
English  Statesmen — Sir  Robert  Peel's  Speecii — Lord  Joh.v  Russell  in  Op- 
position— Sir  Archib.vld  Alison's  Views — Lord  Palmerston,     .         .      •    .  ?A1 

Cu.w.  II. — From  the  Passing  of  the  Bank  Charter  Act  in  1844,  to  the  fall  oi  Sir  " 
Robert  Peel's  Ministry  in  June,  1846 — Views  of  Sir  A.  Alison — Railway 
Mania  of  1845 — Railway   Frauds — Effects   of  Overtrading — Conmierciid 
Policy  of  Sir  Robert  Peel,         .........  :',~i>i 

Chap.  III. — From  the  Introduction  of  Free  Trade  and  fall  of  Sir  Roueut  Pei;l  in 

June,  1846,  to  the  suppression  of  the  Chartist  Insurrection  in  April,  1848,  :J71 

Chap.  IV.— The  Years  1848,  1849,  1850,  1851.— The  Year  1848— Rate  of  Inter- 
est, Eight  per  cent. — Revolution  in  France — Consols  down  to  83 — Suspen- 
sion of  the  Bank  of  France — Failures  in  France — Chartist  Movement — 
Extraordinary  Decline  in  Railway  Securities — Unsatisfactory  Results  of 
the  Year — Attempts  to  Amend  the  Bank  Charter — Speech  of  Sir  R.  Peel 
— Examination  of  the  Governor  and  Directory  of  the  Bank — Prices  of  Sta- 
ples— Year  1849 — Election  of  President  in  France — Improved  Prospects — 
Year  1850 — Low  Rate  of  Discount — Xew  Loans  to  Russia  and  Denmark — 
The  Scotch  Exchange  Banks — Extraordinary  Advance  in  Cotton — Califor- 
nia Gold  Arrivals — Improvement  in  Railway  Shares — Year  1851 — Short 
Harvest — Failures  in  U.  S. — New  Loan  to  Sardinia — Discoveries  of  Gold 
in  Australia — Extraordinary  Coinage  in  France  and  England,   .  .  3!"0 

Chap.  Y.— The  Years  1852,  1853,  1854— The  Year  1852— Reduced  Values  of 
Foreign  Staples — Fluctuations  in  Prices — Speculation  in  Australian  Gold 
Mining  Shares — Increased  Consumption  of  Cotton — Imports  and  Exports 
of  the  Precious  Metals — The  Year  1853 — Extraordinary  Low  Rate  of  In- 
terest— Over-trading  in  consequence — Strikes  for  Wages  in  London  ami 
in  the  Cotton  Districts — War  between  Russia  andTurkej' — Extruordinury 
Prosperity  of  the  Shipping  Interest — Heavy  Imports  of  Timber  frura 
America — The  Year  1854 — War  with  Russia — California  Trade  in  Exces.-> 
— Fortunate  Receipts  of  Gold  from  Australia — Rate  of  Interest  on  the  Con- 
tinent— Fluctuations  in  Freights — Summary  of  Events  for  Four  Years 
past, \m 


viii  Contents. 

Chap.  VI.— The  Years  1855-1856— The  Year  1855— Great  Gloom  Prevailing- 
War  tvith  Russia  continued — Reduction  in  Freights  and  in  Ship-Building 
— Imports  of  Colonial  Timber — Bank  Rate  of  Discount  5  per  cent,  for 
Twenty-two  Months — Reduced  to  4^, .416 

Chap.  VII.— The  Year  1857, 425 

(  HAP.  Vin.— Years  1858,  1859,  1860— Tlie  Bank  Act  of  1 844— Failures  of  1857 
—Loans  to  Bill-Brokers— Forced  Issue  of  £2,000,000  Bank  Notes— Bank 
Failures  in  Scotland — Crisis  in  Ireland — Crisis  in  Liverpool — Continental 
Banks — Price  of  Gold — Opinions  of  Lord  Overstone — Yearly  Average  of 
Notes,  1844-1858 — Evidence  of  Bank  Directors — Failures  of  Commercial 
Houses — Joint-Stock  Banks — Fluctuations  in  Prices — Continental  Banking 
—Death  of  Mr.  Tooke, 438 

Conclusion. — The  frequent  alterations  of  tlie  Minimum  rate  of  Discount  of  the 
Bank  of  England,  during  eight  years,  1847-1855 — Comments  thereon  of 
the  Lords'  Report, 461 


ERRATA— Pa^e  313. 


Bank  of  England  dividend,  October,  1860 — For  4^  read  5  per  cent. 

"  "  ■'         April,       1861 — i^or  4J- 7-faJ  5  per  cent. 

"  "  October,  1861 — i^or  4|- reat?  5  per  cent. 


HISTORY 


BANK    OF   ENGLAND. 


BY  JOHN  FRANCIS. 


CHAPTER    I. 

INVENTION  OF  BILLS  OF  KXCtt.\NGE— ^INTERESf  FORBIDDEN NEAPOLITAN  LENDING  HOUSES 

DEFENCE  OF  TUB  HEBREW NECESSITY  OF  HENRY  III. SUCCESS  OF    THE   HEBREW B.WJK 

OF    VENICE THE    LOMBARDS    IN   ENGLAND THEIR    PERSECUTION COMPLAINTS   AGAINST 

THEM ENGLISH  COMPANIES ADVANCE  IN  COMMERCE ROUTE  TO    CHINA ABOLITION   OF 

FOREIGN  LOANS. 

CoMMEKCE,  the  precursor  of  banking,  was  in  a  low  condition  at  the 
date  of  the  Norman  conquest,  when  the  English  were  a  pastoral  people. 
The  devastating  wars  which  ensued  prevented  population  from  increas- 
ing, and  commerce  from  improving.  Land,  also,  to  a  great  degree,  re- 
mained untilled.  The  fertilization  now  extending  over  hill  and  dale  was 
then  wanting.  The  graceful  glebe,  the  cultivated  country,  with  all  the 
luxurious  evidences  of  a  mature  civilization,  were  absent.  The  place  of 
these  was  supplied  by  forests,  rich  with  the  hues  of  their  varied  occu- 
pants, and  by  wild  extensive  tracts  of  land,  which  afforded  profitable  and 
often  picturesque  pasturage  for  large  droves  of  sheep  and  horned  cattle. 

The  hides  and  wool  derived  from  these  were  the  staple  articles  of 
merchandise,  forming  the  principal  revenue  of  the  proprietor ;  and  Flan- 
ders, even  then  a  manufacturing  country  of  comparative  importance,  was 
their  chief  recipient.  As  continental  languages  were  almost  unknown  in 
London,  the  business  was  conducted  by  foreigners ;  but  the  trade  of  a 
whole  year  only  amounted  to  one  or  two  hundred  thousand  pounds ;  and 
for  the  first  two  centuries  after  the  conquest,  rarely,  if  ever,  exceeded  two 
hundred  and  fifty  thousand.  During  this  period,  then,  it  is  obvious  that 
no  other  bank,  save  the  stronghold  of  the  castle,  or  the  treasury  of  the 
convent,  was  required. 

In   the   proportion,  however,  that   population   increased,   that  fresh 

branches  of  commerce  were  formed,  and  that  the  powers  of  the  country 

began  to  develop  themselves,  a  new  want  was  likely  to  arise.     It  was,  in 

all  probability,  during  such  a  period,  that  the  deficiency  of  money  first 

2 


14  History  of  the  Bank  of  England. 

made  the  JeAV  remarked  for  the  great  business  capacity  wMch  distin- 
guishes him  up  to  the  present  time,  and  which  even  then  enabled  him  to 
make  advances  on  security.  The  members  of  this  race,  who  have  always 
taken  the  initiative  in  money  getting,  had  the  misfortune,  in  an  age  com- 
paratively rude,  to  attract  the  cupidity  of  their  masters. 

"  When  a  whole  people,"  says  the  elder  D'Israeli,  in  his  "  Genius  of 
Judaism,"  "  devote  themselves  to  one  great  pursuit,  one  single  art,  they 
open  sources  of  invention,  they  reach  to  a  noble  perfection.  Unhappily 
for  the  present  professors,  that  great  pursuit,  that  single  art,  was  the 
commerce  of  money  ;  and  to  render  fortunes  invisible,  their  genius  pro- 
duced the  wonderful  invention  of  bills  of  exchange ;  an  object,  like  the 
art  of  printing,  become  too  familiar  to  be  admired ;  the  miracle  has 
ceased,  and  its  utility  only  remains  ;  yet  both  are  sources  of  civilization, 
and  connect  together,  as  in  one  commonwealth,  the  whole  universe. 
Their  successful  pursuits  worked  their  own  fatality.  The  Hebrews  be- 
came the  reservoirs  of  the  wealth  of  the  strange  lands  where  they  were 
found.  For  the  steel-clad  baron  they  were  sponges  to  suck  in  as  much 
water  as  they  could  hold,  that  his  protecting  hand,  as  he  listed,  might 
squeeze  them  to  their  last  drop  ;  for  the  luxurious  abbots  and  the  rosy 
canons,  who  heaped  up  their  improvident  bonds  on  the  Hebrew  affecting 
the  poverty  he  was  to  relieve,  the  Jews  became  the  creditors  of  a  whole 
province." 

By  a  decree  of  Edward  the  Confessor,  the  taking  of  interest  was  first 
prohibited.  For  a  long  period  the  prejudices  of  priest  and  people  had 
struggled  with  the  growing  wants  of  trade.  To  receive  interest  for 
money  lent,  was  to  incur  the  invidious  name  of  usurer.  With  this  had 
each  successive  phase  of  commerce  wrestled.  By  this  had  each  growing 
effort  of  business  been  injured.  With  this,  also,  had  even  the  lending 
houses  of  Italy  to  contend,  when,  with  a  spirit  worthy  the  Christianity 
he  professed,  the  Neapolitan  of  the  sixteenth  century  attempted  to  de- 
liver the  poor  and  the  needy  from  the  grasp  of  the  extortioner.*  The 
religionist,  who  took  too  limited  a  view  of  the  Scripture  he  professed  to 
expound,  argued  that,  by  the  decree  of  the  Israelitish  legislator,  it  was  a 
direct  violation  of  the  will  of  heaven  to  receive  interest  for  money  bor- 
rowed.    This  fallacy  is  most  conclusively  answered  by  Mr.  Gilbart,  in 


*  "The  lending  bouse  at  Naples  was  first  established  in  1539  or  1540.  Two 
rich  citizens,  Aurelio  Papako  and  Leonardo  or  Nardo  di  Palm.\,  redeemed  all  the 
pledges  which  were  at  that  time  in  the  hands  of  the  Jews,  and  offered  to  deliver 
them  to  the  owners  without  interest,  provided  they  would  retnrn  the  money  which 
had  been  advanced  on  them.  More  opulent  persons  soon  followed  their  example ; 
many  bequeathed  large  sums  for  this  benevolent  purpose  ;  and  Toledo,  the  viceroy, 
who  drove  the  Jews  from  the  kingdom,  supported  it  by  every  method  possible. 
This  lending  house,  which  has  indeed  imdergone  many  variations,  is  the  largest  in 
Europe ;  and  it  contains  such  an  immense  number  of  different  articles,  many  of 
them  exceedingly  valuable,  that  it  may  be  considered  as  a  repository  of  the  most 
important  part  of  the  movables  of  the  whole  nation.  About  the  year  16S5  another 
establishment  of  the  like  kind  was  formed,  under  the  title  of  banco  de'  poveri.  At 
first  this  bank  advanced  money  without  interest,  only  to  relieve  confined  debtors. 
Afterwards,  as  its  capital  increased,  it  lent  upon  pledges,  but  not  above  the  sum  of 
five  ducats,  without  interest.  For  larger  sums  the  usual  interest  was  demanded." — 
Beckmann^s  History  of  Inventions,  vol.  2. 


Defence  of  the  Hebrew.  15 

his  "  History  of  Banking."  "  It  was  the  object  of  the  Jewish  legislator 
to  make  the  Jews  a  purely  agricultural  people.  The  promotion  of  agri- 
culture was,  as  Montesquieu  would  say,  the  spirit  of  his  laws.  Hence 
he  prohibited  the  taking  of  interest  for  the  loan  of  money.  By  this 
means  he  interdicted  commerce.  His  design  was  to  prevent  the  Israelites 
associating  with  the  surrounding  nations,  and  learning  their  idolatrous 
practices.  But  even  Moses  permitted  the  Jews  to  take  interest  for  money 
lent  to  strangers — a  circumstance  which  proves  that  the  prohibition  was 
a  political,  and  not  a  moral  precept." 

During  the  period  to  which  we  have  alhided,  the  Hebrews  may  almost 
be  regarded  as  the  compulsory  bankers  of  the  luxurious  monarch  and  tlie 
iron  chief;  for  not  only  were  this  patient  people  at  the  absolute  disposal 
of  the  regal  oppressor;  the  warlike  baron  also  looked  down  from  his 
stronghold  upon  the  suffering  Jew,  as  a  source  of  revenue  to  be  measured 
only  by  his  own  wants,  or  the  capacity  of  his  victim. 

"  The  prejudices  of  the  age,"  says  Hume,  "  had  made  the  lending  of 
money  on  interest  pass  by  the  name  of  usury ;  yet  the  necessity  of  the 
practice  had  still  continued  it,  and  the  greater  part  of  that  kind  of  deal- 
ing fell  every  where  into  the  hands  of  the  Jews,  who  being  already  infa- 
mous on  account  of  their  religion,  had  no  honor  to  lose,  and  were  apt  to 
exercise  a  profession  odious  in  itself  by  every  kind  of  rigor,  and  some- 
times by  rapine  and  extortion." 

We  are  prone  to  judge  the  actions  of  a  preceding  age  by  the  precepts 
which  guide  our  own.  *'  Rapine  and  extortion"  unhappily  marked  the 
path  of  the  Christian  in  his  dealings  with  the  Hebrew.  History  teems 
with  relations  to  which  "  rigor"  would  be  far  too  mild  a  term  to  apply, 
John  had  no  charter,  save  that  of  the  strong  hand,  to  extract  the  teeth 
from  the  Jew  who  refused  to  be  unrighteously  robbed.  Henry  HI.  had 
no  right  save  that  of  might  to  wring  from  this  people  their  hard-earned 
money,  in  a  series  of  cruel  exactions  which  lasted  for  half  a  century. 
The  bold  but  barbarous  baron,  licentious  alike  in  all  his  dealings,  asked 
only  his  own  evil  passions  for  permission  to  outrage  his  fellow  man. 

The  Hebrew,  acting  after  the  knowledge  vouchsafed  to  him,  willing  to 
grasp  the  only  power  he  was  allowed  to  exercise,  happy  also  in  being 
able  to  retaliate  on  the  hated  race  that  wronged  him,  sought  and  seized 
on  every  opportunity  which  enabled  him  to  gratify  at  once  his  love  of 
vengeance  and  of  money. 

In  a  note  to  Eapin's  History,  Tindal  says,  "  The  King  of  England  was 
wont  to  draw  a  considerable  revenue  from  the  Jews  residing  in  this  realm, 
namely :  by  tallage  (or  assessment)  and  fines  relating  to  laio  proceediyigs, 
hy  amerciaments  for  misdemeanors,  and  bg  fines,  ranso7ns,  com2Msitions, 
which  they  were  forced  to  fay  for  having  the  Jcing''s  benevolence  ;  for  j^ro- 
tection,for  license  to  trade,  for  discharges,  for  imprisonment,  and  the  like. 
He  would  tallage  the  whole  community  or  body  at  pleasure,  and  make 
them  answer  the  tallage  for  one  another.  In  short,  the  king  seemed  to 
be  absolute  lord  of  their  estates  and  effects,  of  their  persons,  their  Avives 
and  children." 

In  this  brief  passage  there  is  a  goodly  list  of  excuses  for  the  exercises 
of  might  over  right.  A  goodly  list  of  apologies,  with  which  the  Christian 
attempted  to  justify  his  conscience,  while  he  satiated  his  lust  after  money. 


16  History  of  the  Bank  of  England. 

But  "  tlic  peculiar  people"  were  neither  allowed  to  leave  the  land  in 
which  they  were  pursued  with  so  much  malignity,  or  to  rest  in  peace 
while  they  remained  there.  Henry  III.,  their  persecutor  and  their  pest, 
betrayed  his  evil  passions  when  memorialized  by  this  people  for  permis- 
sion to  quit  England,  in  the  exclamation  :  "  Is  it  to  be  marvelled  at  that 
I  covet  money  !  It  is  a  horrible  thing  to  imagine  the  debts  wherein  I 
am  bound.  By  the  head  of  God  they  amount  to  two  hundred  thousand 
marks,  and  if  I  should  say  three  hundred,  I  should  not  exceed  the  truth. 
I  am  deceived  on  every  side  ;  I  am  a  maimed  and  abridged  king,  yea,  now 
but  half  a  king.  There  is  a  necessity  for  me  to  have  money,  gotten  from 
luhat  2>l(ice  soever,  and  by  tohat  means  soever,  and  from  whom  soever.'''' 

History  is  replete  with  the  oppression  of  the  Hebrew  jieople,  written 
in  characters  of  blood.  They  were,  indeed,  the  great  source  of  revenue. 
They  were  made  use  of  on  all  ordinary  and  extraordinary  occasions. 
*'  Their  command  of  cash,  combined  with  their  acute  and  business  habits, 
enabled  them,"  says  a  modern  writer,  "  almost  to  monopolize  the  business 
of  traders  and  money-dealers,  and,  of  course,  their  profits  were  very  great. 
This  was  their  compensation  for  the  state  of  subjection  in  which  Ihey 
were  held,  and  that  which  induced  them  to  remain  in  the  kingdom,  not- 
withstanding all  the  exactions  of  the  crown.  It  was  an  engine,  neverthe- 
less, which  there  was  some  art  and  management  required  in  working. 
On  the  one  hand  these  Jews  were  not  to  be  treated  Avith  so  much  severity 
as  to  make  them  wish  to  quit  the  country.  They  were  to  be  tempted  to 
remain  in  it.  For  this  purpose,  the  process  in  Avhich  they  acted  so  im- 
portant a  part,  while  it  largely  benefited  the  king,  was  to  be  allowed  to 
be  also  somewhat  profitable  to  themselves.  The  pressure  of  the  royal 
grasp  was  not  to  be  carried  so  far  as  to  wring  from  them  the  whole 
amount  of  their  extortionate  gains.  Above  all,  they  wexQ  to  be  protected 
by  the  law  in  those  rights,  without  the  enforcement  of  which  they  could 
not  have  satisfied  the  rapacity  of  their  oppressor.  But,  on  the  other 
hand,  the  hatred  with  which  they  were  naturally  regarded  by  the  people 
was  also  to  be  maintained  and  cherished  ;  for  without  this,  it  would  have 
been  impossible  for  the  sovereign  power  to  have  continued  to  treat  them 
in  the  arbitrary  and  tyrannical  manner  we  have  described.  It  was,  no 
doubt,  found  to  be  somewhat  difiicult  to  effect  these  two  objects  at  the 
same  time,  namely,  to  grant  to  the  Jews  the  perfect  protection  of  the 
law  against  every  one  else,  except  the  king,  and  yet  to  keep  the  popular 
feeling  against  them  in  so  inflamed  a  state,  that  it  was  always  ready  to 
approve  whatever  cruelty  and  oppression  that  single  and  licensed  power 
might  exercise  upon  them," 

Another  reason,  besides  "  the  possession  of  all  the  ready  money,"  of 
their  remarkable  success  in  trade,  was  the  quiet  energy  with  Avhich  they 
pursued  their  calling.  Undisturbed  by  love  of  country,  for  they  were  an 
outcast  people  ;  unstimulated  by  the  love  of  war,  for  they  were  a  peaceful 
race  ;  uncalled  upon  by  Norman  baron  or  Saxon  chief  to  assist  him,  save 
with  cash  and  credit,  for  other  help  from  them  was  worthless ;  they  de- 
voted themselves  with  undivided  mind  to  a  pursuit  which,  while  it 
excited  the  inexorable  passions  of  their  masters,  made  the  Hebrews  the 
possessors  of  that  wealth,  which  was  alike  their  consolation  and  their 
•curse. 


The  Lombards  of  England.  17 

It  appears,  then,  from  the  slight  sketch  given  of  this  remarlvable  body, 
that  the  writer  is  justified  in  terming  them  the  compulsory  bankers  of 
the  period.  Their  earliest  known  persecution  occurred  in  1189,  during 
the  reign  of  Richard  Cceur  de  Lion,  about  the  period  that  the  first 
European  bank,  the  Bank  of  Venice,  was  established.  While  the  rude 
barbarism  of  the  North  resorted  to  the  policy  shortly  to  be  described, 
Venice,  with  all  the  grandeur  of  an  advanced  commercial  knowledge, 
established,  upon  a  scale  so  just  that  it  has  since  served  as  a  model  for 
its  successors,  the  earliest  bank  in  Europe. 

Towards  the  end  of  the  thirteenth  century,  the  country  ceased  to  re- 
ceive support  from  the  Hebrew.  Edward  L,  unable  to  resist  a  grant 
from  Parliament,  and  stimulated  by  the  prospect  of  an  immediate  booty, 
consented  to  the  expulsion  of  this  people  from  England.  With  what 
circumstances  of  degradation  and  cruelty  it  was  conducted,  let  the  chroni- 
cles of  the  time  repeat ;  but  from  this  period  to  their  re-admission,  during 
the  government  of  the  great  and  politic  Cromwell,  in  the  seventeenth 
century,  they  ceased  to  interfere  with  the  monetary  or  commercial  trans- 
actions of  the  English  community. 

It  is,  we  think,  difficult  to  account,  excepting  by  the  bigotry  of  the 
age,  for  the  intense  hatred  borne  to  this  insulted  race.  It  would,  per- 
haps, be  still  more  diflicult  to  find  a  reason  for  the  great  folly  which 
prompted  their  expulsion,  at  the  expense  of  a  revenue  so  easily  obtained,* 
were  it  not  possible  that  some  light  may  be  thrown  on,  and  some  excuse 
made  for,  this  great  political  error,  by  the  fact  that,  in  the  same  century, 
the  Lombards — by  which  general  term  the  early  Italian  merchants  of 
Genoa,  Florence  and  A^'enice  were  known — came  over  and  established 
themselves  in  the  street  which  still  bears  their  name.  With  them  came 
many  of  the  arts  and  the  skill  of  trade ;  with  them  came  the  only  know- 
ledge of  banking  then  possessed  ;  with  them  canie  into  more  common 
use  "  the  wonderful  invention"  of  bills  of  exchange,  by  the  agency  of 
which  they  remitted  money  to  their  own  country.  Success  followed  ex- 
ertion ;  a  firm  footing  was  obtained  by  the  skilful  Lombard ;  he  was  the 
first  who,  uniting  to  the  art  of  the  goldsmith  the  science  of  the  banker, 
took  the  initiative  in  that  business,  which  has  since  been  the  agency  of  so 
much  good,  and  which  has  been  found  to  increase  with  the  trade  and 
commerce  of  the  country.  The  success  of  the  Lombard  was  not  un- 
marked by  the  third  Edward.  With  the  false  policy  of  a  barbarous  age, 
this  monarch  sought  to  supply  the  necessities  of  the  crown  by  treating 
the  Lombard  as  his  predecessors  had  treated  the  Israelite.  The  reign  of 
Edward  was  marked  by  a  lavish  expenditure  of  blood  and  money.  The 
hardy  Scot  felt  his  prowess  at  Halidon  Hill.  The  village  of  Crecy  wit- 
nessed the  triumph  which  is  yet  talked  of  at  our  English  firesides,  and 
from  which  the  first  prince  of  royal  blood  derives  his  motto  at  the  present 
day.     Poictiers,  in  the  capture  of  the  French  monarch,   was  the  com- 

*  "  During  a  space  of  only  about  seven  years,  from  the  17tli  of  December,  in  the 
fiftieth  year  of  Henry  III.,  till  the  Tuesday  in  Shrovetide,  in  the  second  year  of 
Edward  I.,  the  crown  is  stated  to  have  extorted  from  the  Jews  (amounting  in  all  to 
probably  not  more  than  five  hundred  families)  the  immense  sum  of  £420,000  los.  4d.'' 
— Popular  Tumults. 


18  History  of  the  Bank  of  England. 

pletion  of  the  great  series  of  conquests,  which,  while  it  shed  a  nearly  un- 
paralleled glory  over  British  arms,  made  the  conqueror  feel  most  keenly 
the  want  of  that  money  which  had  hitherto  been  principally  supplied  by 
extortions  from  the  Jew. 

Monarchs  rarely  allow  the  absence  of  a  reason  to  stand  between  them 
and  their  desire.  If  the  industry  of  the  Lombards  had  produced  wealth, 
wealth  produced  persecution. 

To  apply  the  words  which  the  elder  D'Israeli  wrote  upon  another 
topic :  "  It  was  their  calamity  to  excel  in  the  arts  their  neighbors  prac- 
ticed. A  society  Avhich  becomes  too  powerful  by  their  wealth  has  ever 
been  marked  out  for  the  spoil  of  the  government  or  the  people ;  there 
are  so  many  passions  in  human  nature  which  are  allied  against  a  flourish- 
ing body.  First  hated,  and  then  calumniated,  they  become  the  victims 
of  State,  and  justice  veils  her  eyes  during  the  popular  suppression  or 
destruction.  Such  was  the  fate  of  the  order  of  the  Templars,  of  the 
English  monastic  institutions,  of  the  Jesuits  throughout  Europe.  The 
historical  problem  is  of  no  difficult  solution.  Whenever  a  heavy  price  is 
proclaimed  to  discover  offenders,  however  innocent,  off'enders  will  be 
found  ;  and  for  the  informers  there  can  be  no  higher  price  than  a  share  in 
the  confiscation." 

Under  the  pretext  that  the  Lombards  were  extortioners,  Edward  III. 
seized  their  property  and  estates.  "  Perhaps,"  remarks  Maitland,  very 
shrewdly,  "  the  necessity  for  furnishing  him  with  money  for  his  lavish 
expenditure  might  have  urged  him  to  this  step." 

The  enmity  of  the  monarch  stimulated  fresh  complaints  from  his  people. 
Those  to  whom  we  are  indebted  are  seldom  regarded  favorably  by  us ; 
and  probabl}'^  the  debtor  was  more  to  blame  than  the  creditor.  The  de- 
fective laws  of  the  period  enabled  the  former  occasionally  to  evade  his 
just  debts  ;  this  naturally  produced  a  treble  vengeance  from  the  money- 
lender, in  the  form  of  increased  interest,  if  the  occasion  off'ercd,  and  in 
imprisonment,  if  he  failed  to  meet  the  demand  of  the  Lombard  on  the 
appointed  day ;  if  not,  the  wronger  is  always  harsh  in  his  judgment  of 
the  man  he  has  wronged. 

Persecution  j^roduced  its  accustomed  fruits.  The  Lombards  increased 
in  Avealth,  power  and  position.  They  had  gained  so  much  importance 
by  the  fifteenth  century,  that  v>'e  find  them  advancing  a  large  sum  for 
the  service  of  the  State  on  the  security  of  the  customs. 

"  They  dealt,"  says  PtOBERTSON,  "  largely  as  bankers.  They  carried 
on  this,  as  well  as  other  branches  of  their  commerce,  with  somewhat  of 
that  rapacious  spirit  which  is  natural  to  monopolists,  who  are  not  re- 
strained by  the  concurrence  of  rivals."  "  Accordingly,  we  find  it  was 
usual  to  demand  twenty  per  cent,  for  the  use  of  money,  in  the  thirteenth 
century."  "  They  enjoyed  great  privileges,  and  carried  on  extensive 
commerce,  particularly  as  bankers." 

It  was  from  such  bodies  as  these,  and  the  "  Steel-yard  merchants,"  our 
masters  in  the  art  of  commerce,  that  the  kings  of  England,  on  any  sud- 
den exigency,  sought  and  obtained  their  principal  supplies,  on  what  now 
appears  an  exorbitant  interest. 

The  important  body  of  Steel-yard  merchants  was  cherished  with  great 
and  peculiar  privileges.     If  great  privileges  were  granted,  however,  great 


Route  to   China.  19 

services  were  often  claimed  in  return.  "  The  Steel-yard  company,"  re- 
marks Mr.  GiLBART,  "  was  a  kind  of  bank  to  our  kings,  whenever  they 
wanted  money  on  any  sudden  emergency  ;  but  the  company  was  sure,  in 
the  end,  to  be  well  paid  for  such  assistance." 

The  merchants  of  the  Staple,  (so  called  from  their  StapelhofF,  or 
general  house  of  trade  for  the  German  nation,)  the  mercers,  whose  ex- 
istence as  a  body  may  be  traced  to  the  twelfth  century ;  the  merchant 
adventurers,  who  boldly  steered  their  vessels  to  unknown  shores  in  search, 
of  commerce ;  the  traders  of  Flanders,  then  in  the  pride  and  pomp  of 
wealth  derived  from  successful  industry,  had  all  successively  ministered 
to  the  service  of  the  State.  Nor  had  the  citizens  failed  in  supplying 
similar  assistance.  When  Edward  III.  resolved  upon  an  expedition  to 
France  the  wards  advanced,  according  to  their  several  ability,  twenty 
thousand  marks,  which  the  Parliament  voted,  in  order  that  the  warlike 
adventures  of  the  monarch  might  be  successfully  pursued. 

The  reign  of  Henry  VII.  was  distinguished  by  a  great  advance  in 
commerce.  This  politic  sovereign  endeavored  to  raise  and  cherish  the 
Commons  as  an  important  barrier  against  the  power  of  the  baron.  The 
.ndependence  of  the  latter  was  troublesome  to  peace;  but  as  the  serf 
grew  with  the  favor  of  the  monarch,  and  the  increase  of  commerce  and 
agriculture,  (the  latter  of  which  Henry  particularly  aifected,  as  the 
"  vigor  and  nerves  of  the  English  state,")  so  was  the  baron  compelled  to 
retire  within  his  natural  and  proper  boundary. 

The  great  discovery  of  the  greatest  man  of  his,  or  perhaps  any  age, 
occurred  this  century.  The  new  world  was  made  known  to  the  old 
by  Christopher  Colon,  commonly  called  Columbus  ;  and  though  the 
mind  revolts  at  the  cruelties  which  followed  the  adventures  of  the  Geno- 
ese, yet  it  is  incumbent  on  us  to  own  the  impulse  received  by  commerce 
throughout  that  which  was  termed  the  civilized  world.  The  movement 
could  not  fail  to  be  felt  in  England ;  and  John  Cabot,  a  Venetian,  set 
sail  with  his  three  sons,  under  a  license  granted  by  Henry  VII.,  for  the 
discovery  of  unknown  lands. 

In  the  year  1505,  the  twentieth  of  this  monarch's  reign,  the  first  char- 
ter was  granted  for  establishing  the  "  Fellov/ship  of  Merchant  Adven- 
turers." During  this  century  also  the  Newfoundland  and  other  fisheries, 
the  Turkish  trade,  and  a  trade  to  Russia,  were  established,  and  in  its  last 
year  was  incorporated  the  East  India  Company.  It  was  also  within  the 
same  period  that  Sir  Hugh  Willoughby,  with  three  vessels,  set  sail  to 
discover  a  near  route  to  China.  By  the  sudden  approach  of  winter  he 
was  compelled  to  seek  refuge  within  an  obscure  harbor  in  Russian  Lap- 
land, where,  with  the  crew  of  two  of  his  vessels,  he  was  frozen  to  death  ; 
and  when  the  Laplanders,  in  pursuance  of  their  annual  custom,  sought 
the  sea-coast  in  summer,  for  the  sake  of  its  fishery,  they  found  the  re- 
mains of  the  unhappy  adventurer,  who,  meditating  a  great  discovery,  had 
met  with  an  obscure  death.  It  is  a  touching  picture  to  contemplate  him 
as  he  was  found,  sitting  with  his  diary  and  papers  before  him  as  in  life, 
and  to  think  how  little  his  aspiring,  but  noble  ambition,  meditated  so 
melancholy  a  fate. 

The  expedition  was  not  without  its  benefit,  as  one  vessel  escaped. 
Richard  Chancellor,  its  commander,  landed  near  Archangel,  and  in- 


20  History  of  tfie  Bank  of  England. 

clined  tlie  Czar,  Ivan  Bazilowitz,  then  engaged  in  llie  Livonian  war,  to 
grant  considerable  commercial  privileges  to  the  English. 

Such  was  the  state  of  commerce,  when,  after  the  lapse  of  half  a  cen- 
tury, a  great  man  arose.  The  mild,  but  childish  Edward,  the  persecut- 
ing Mary,  and  the  politic  Elizabeth,  found  it  equally  to  their  interest 
to  employ  the  enlarged  mind  and  great  talents  of  Thomas  Gresham. 

The  reign  of  Elizabeth  was  marked  no  less  by  an  advance  in  poeti7 
and  philosophy  than  by  a  rapid  increase  in  the  science  of  money.  It 
almost  seemed  as  if  nature,  hitherto  checked  in  her  development  by  in- 
ternal convulsions  and  unhealthy  strife,  used  extraordinary  efforts  to  re- 
pair the  evils  produced  by  civil  war.  Amid  the  names  which  adorn  the 
period,  that  of  Gresham  takes  a  noble  position.  To  this  great  citizen 
we  owe  the  abolition  of  loans  from  foreign  States.  By  his  agency  the 
financial  diflBculties  of  the  reign  were  ably  met.  The  peremptory  neces- 
sity which  compelled  the  government  to  borrow,  produced  a  difficulty  on 
the  part  of  the  lender,  in  exact  proportion  to  the  exigency  of  the  bor- 
rower. The  value  arose  with  the  necessity ;  twelve  and  even  fourteen 
per  cent,  was  paid  for  the  accommodation.  "  After  negotiating  several 
loans,"  says  the  historian  of  the  Royal  Exchange,  "  Gresham  felt  that, 
instead  of  sending  such  large  sums  abroad,  it  would  be  a  desirable  thing 
to  secure  them  for  the  capitalist  at  home.  With  the  eye  of  a  statesman, 
he  saw  that  it  would  be  more  convenient  for  the  borrower."  By  his 
counsel  Elizabeth  was  induced,  when  a  loan  was  necessary,  "not  to  use 
strangers,  but  her  own  subjects,  that  it  might  be  seen  what  a  prince  of 
power  she  was." 

Her  first  applications  to  the  citizens  were  not  met  with  sufficient  alac- 
rity to  please  the  imperious  queen.  She  who  could  imprison  a  favorite 
for  life,  or  send  a  rival  to  the  block,  was  checked  by  her  plebeian,  but 
wealthy,  subjects.  The  pride  of  the  eighth  Henry  had  descended  with 
his  crown  to  his  daughter,  and  she  caused  it  to  be  intimated  to  the  un- 
willing merchants  that,  to  borrow  their  money  "was  a  matter  of  great 
grace  and  favor."  On  another  occasion,  the  haughty  Tudor  incarcerated 
a  resolute  citizen,  who  was  too  modest  to  place  himself  under  so  great  an 
obligation.  It  is  scarcely  possible  to  bestow  too  much  praise  on  the 
princely  merchant  who  originated  the  idea  which  saved  the  kingdom 
from  foreign  loans,  which  gave  the  large  interest  paid  by  the  State  to  the 
English  trader,  and  which,  at  the  same  time,  offered  to  the  crown  a 
security  never  possessed  through  the  agency  of  means  so  legitimate.  It 
was  owing  to  his  active  exertions  that  the  principle  was  carried  out,  and 
the  objections  of  the  citizens  conquered.  The  accommodation  was  found 
to  be  in  some  measure  reciprocal ;  at  a  late  period  the  merchants  trading 
to  Turkey  acted  as  bankers  to  the  nation,  by  borrowing  a  considerable 
amount  of  bullion  previously  lying  idle  in  the  tower. 

That  the  character  of  Gresham  has  not  been  overrated  is  proved  by  the 
scheme  he  devised  at  Antwerp,  for  operating  on  the  exchanges,  so  as  to 
render  them  favorable  to  England.  He  promised  Edward  VI.,  diiring 
the  reign  of  whom  this  occurred,  that  if  he  might  pursue  his  own  views, 
he  would  remove  all  his  sovereign's  difficulties  in  two  years.  The  fo 
lowing  is  his  plan,  relieved  from  its  antiquated  spelling : 

"  My  request  shall  be  to  his  majesty  and  you,  to  appoint  me  out,  we  e  kly 


Exchange  Operation.  21 

twelve  or  thirteen  liundrcd  pounds,  to  be  secretly  received  at  one  man's 
hands,  so  that  it  may  be  kept  secret,  and  that  I  may  thereunto  trust,  and 
that  I  may  make  my  reckoning  thereof  assuredly.  I  shall  so  use  the 
matter  here  in  the  town  of  Antwerp,  that  every  day  I  will  be  sure  to  take 
up  two  or  three  hundred  pounds  sterling  by  exchange.  And  thus  doing, 
it  shall  not  be  perceived,  nor  yet  shall  be  occasion  to  make  the  exchange 
faU.  For  that  it  shall  be  taken  up  in  my  name.  And  so  by  these  means, 
in  working  by  deliberation  and  time,  the  merchant's  turn  also  shall  be 
served.  As  also  this  should  bring  all  merchants  out  of  suspicion,  who 
do  nothing  towards  payment  of  the  king's  debts,  and  will  not  stick  to 
say,  that  ere  the  payment  of  the  king's  debt  be  made,  it  will  bring  down 
the  exchange  to  13s.  4d.,  which  I  trust  never  to  see  that  day.  So  that 
by  this  you  may  perceive  if  that  I  do  but  take  up  every  day  but  d£200 
sterling,  it  will  amount  in  one  year  to  £72,000,  and  the  king's  majesty 
oweth  here  at  this  present  £108,000,  with  the  interest  money  that  was 
prolonged  before  this  time.  So  that,  by  these  means,  in  two  years, 
things  will  be  compassed  accordingly,  and  my  purpose  set  forth." 

"  IIow  correct,"  says  Mr,  Burgon,  in  his  "  Life  and  Times  of  Sir  Thomas 
Gresham,"  "  he  was  in  the  results  lae  anticipated,  from  these  and  similar 
measures,  appeared  in  the  sequel  by  the  success  which  attended  them. 
He  found  means  in  a  short  space  to  raise  the  exchange  from  sixteen  shil- 
lings Flemish  for  the  pound  sterling  to  twenty-two  shillings,  at  which 
rate  he  discharged  all  the  king's  debts,  and  by  this  means  money  was 
rendered  plentiful  and  trade  prosperous,  while  the  credit  of  the  crown 
became  established  on  a  firmer  basis  abroad  than  it  had  ever  been  before." 


22  History  of  the  Bank  of  England. 


CHAPTER    II. 

DANGER  OF  CD.UILES  1. — SEIZURE  OF  THE  MERCHANTS'  MONEY — ROYAL  EXCHANGER — ABOLI- 
TION   OF    THE    OFFICE THE    HEBREW    IN    ENGLAND HOSTILITY    TO    THE    HEBREW THE 

protector's     DESCENT — GOLDSMITHS'     NOTES — THE     FIRST     BANKER — DIFFICULTIES     OF 

CHARLES    11. EXACTION  OF  THE    GOLDSMITH FIRST    RUN    ON  THE  BANKERS EXPEDIENT 

OF  CLIFFORD PANIC    IN    THE    CITY PUBLIC    INDIGNATION INTEREST  ALLOWED. 

The  robberies  successively  exercised  upon  the  Jew  and  llie  Lombard, 
in  the  dark  ages  of  the  Plantagenets,  were  successfully  imitated  at  a  later 
and  more  polite  period  by  the  Stuarts  ;  but  the  very  blow  which  appeared 
likely  to  crush  the  infant  spirit  of  banking  proved  its  support.  The  new 
features,  which  in  the  seventeenth  century  were  developed  in  its  history, 
arose  from  a  repetition  of  one  of  those  tyrannical  acts  which,  in  their  own 
opinion,  too  often  form  "  the  right  divine  of  kings."  An  evil  spirit — the 
spirit  of  contention — was  abroad.  The  people  Avere  beginning  to  arouse 
themselves  from  the  apathy  with  which  they  had  hitherto  borne  the  suc- 
cessive despotic  acts  of  their  sovereigns.  "  Genius  and  capacity  of  all 
kinds,"  according  to  IIume,  "  began  to  exert  themselves,  and  to  be"^  distin- 
guished by  the  public."  The  danger  environing  Charles  from  an  opposi- 
tion which  ranked  among  its  members  the  "  sagacity  of  Pym,  and  the 
ardor  of  St.  John,  the  daring  impetuosity  of  IIollis,  the  chivalric  valor 
of  Hampden,  the  brilliant  eccentricity  of  Vane,  and  the  profound  sub- 
tlety, yet  magnificent  ambition  of  the  future  master  of  them  all — Crom- 
well"— rendered  money  necessary  to  the  monarch.  The  treasure  arising 
from  the  accumulated  gains  of  the  merchants  had  been  deposited  by  them 
in  the  mint,  then  within  the  tower,  Avith  a  perfect  conviction  of  its  safety. 
If  the  short-sighted  policy  of  the  earlier  kings  of  England  had  extorted 
money  from  the  Jew  and  the  Lombard,  at  least  they  borrowed  from  their 
English  subjects ;  it  remained  for  the  polished  Charles  to  sully  his  fair 
fame  by  robbing  them. 

Yet,  let  him  not  be  judged  too  harshly.  Plight  and  wrong  assume  new 
aspects  under  varying  circumstances.  The  mouarcli  trembled  on  his 
throne.  His  prerogatives  were  denied.  His  favorite  minister  was  im- 
peached. The  claims  of  his  children  were  endangered.  A  discontented 
peoplewere  opposed  to  a  perfidious  court.  An  irritated  Parliament  were 
thwarting  a  proud  aristocracy.  The  supplies  were  stopped,  and  levies 
were  made  in  vain.  To  compass  these  dangers  money  was  required ;  to 
gain  it  by  ordinary  means  was  impracticable.  Ere  judgment  be  passed, 
let  these  things  be  remembered.  Rank,  family,  life,  were  in  the  balance, 
and  the  monarch  yielded.  The  money  placed  by  the  merchants  in  the 
mint,  amounting  to  two  hundred  thousand  pounds,  was  seized;  the 
sanctuary  of  a  people's  commercial  faith  was  violated  to  supply  the  royal 
necessities. 

Another  palliation  to  the  mind  of  Charles  might  perhaps  be  in  the 
consideration  that  the  money  belonged  to  the  merchants ;  that  the  mer- 
chants were  mostly  citizens ;  and  that  the  citizens  were  strenuous  sup- 


The  Hebrew  in  England.  23 

porters  of  the  opposition.  Some  idea  of  their  feelings  toward  the  mon- 
arch may  be  gathered  from  the  following  picture,  by  the  first  essayist  of 
the  day  :  "  The  people  of  this  great  city  had  long  been  thoroughly  de- 
voted to  the  national  cause.  Their  houses,  their  purses,  their  pikes,  were 
at  the  command  of  the  representatives  of  the  nation.  London  was  m 
arms  all  night.  The  next  day  the  shops  were  closed ;  the  streets  were 
filled  with  immense  crowds ;  the  multitude  pressed  around  the  king's 
coach,  and  insulted  him  with  opprobrious  cries." 

The  knowledge  that  the  seizure  of  the  merchants'  money  might  crip- 
ple their  power,  that  in  its  possession  he  would  gain  an  important  addi- 
tion to  his  own  strength,  and  that  it  was  only  to  be  regarded  as  an  equitable 
punishment  for  their  defalcation,  must  be  accepted  as  some  extenuation 
of  this  great  wrong.  A  sufficient  amount  of  evil,  which  no  sophistry  can 
palliate  and  no  excuse  mitigate,  rests  upon  that  "  gray,  discrowned  head," 
without  adding  another  heavy  accusation  to  the  many  justly  brought 
against  him,  "  whose  popularity  with  the  present  generation,"  says 
Macaulay,  "  is  owing  to  his  Vandyke  dress,  his  handsome  face  and  his 
peaked  beard." 

The  office  of  royal  exchanger  must  not  be  omitted.  Up  to  the  reign 
of  Henry  VII.  this  prerogative  of  the  monarch  continued  to  be  ex- 
ercised. English  coins  were  not  allowed  to  be  exported,  aud  the  right 
of  exchanging  them  for  other  money  belonged  to  the  crown.  The  royal 
exchanger  was  alone  entitled  to  give  the  native  for  foreign  coin,  or  for 
bullion. 

During  the  reign  of  Henry  VIII.  the  circulation  became  so  debased  as 
to  be  difficult  of  exchange  by  any  one,  and  the  office  fell  into  disuse ;  the 
goldsmiths  took  advantage  of  this,  and,  deserting  to  a  great  extent  their 
accustomed  calling,  began  to  deal  in  the  debased  money,  exchanging  for 
it  plate  and  foreign  coin.  This  Avas  continued  until  the  reign  of  Charles 
I.,  a  monarch  to  whom  a  prerogative  or  a  monopoly  was  almost  as  dear  as 
his  crown.  In  1027  he  re-established  it  by  royal  proclamation;  but  this 
interference  with  the  trade  of  the  goldsmith  was  received  with  so  little 
satisfaction,  that  the  king  authorized'the  publication  of  a  pamphlet,  vindi- 
cating his  rights,  asserting  that  "  the  prerogative  had  always  been  a  flower 
of  the  crown  ;"  *'  that  the  goldsmiths  had  left  off  their  proper  trade,  and 
turned  exchangers  of  plate  and  foreign  coins,  for  our  English  coins,  al- 
though they  had  no  right." 

All  the  important  bodies  of  the  city,  who  could  quickly  perceive  the 
evil  arising  from  a  monopoly  in  which  they  were  not  allowed  to  partici- 
pate, petitioned  against  the  revival  of  the  office ;  but  petitioning  was  in 
vain.  The  duties  of  "  changer,  exchanger  and  outchanger"  were  given  to 
one,  who  twice  betrayed  his  royal  master  in  return,  to  the  handsomest 
peer  and  the  basest  apostate  of  a  period  remarkable  for  its  apostacy. 
Henry  Rich,  first  Earl  of  Holland,  was  installed  in  possession  of  the 
privilege.  With  the  troubles  of  Charles  the  office  was  abolished  ;  it  has 
not  been  since  established,  having  yielded  to  institutions  which  have  grown 
out  of  the  circumstances  and  character  of  the  times. 

The  return  of  the  Hebrew  to  that  country,  from  which  he  had  been 
ignominiously  driven,  is  usually  attributed  to  Cromwell.  After  the  first 
Charles  had  paid  the  melancholy  penalty  for  his  dissimulation,  a  nego- 


24  History  of  the  Bank  of  Enr/land. 

tiation  is  stated  to  have  taken  place  Avitli  Parliament.  The  demand  of 
the  Israelites  was,  that  the  laws  against  them  should  be  repealed,  and, 
provided  the  Bodleian  library  were  made  over  to  them,  with  an  additional 
permission  to  possess  St,  Paul's  Cathedral,  as  a  synagogue,  they  would 
pay  £500,000.  However  outrageous  this  proposal  seems,  if  a  letter  in 
the  TiiURLOE  State  papers  may  be  trusted,  it  was  absolutely  discussed, 
and  several  debates  occurred  upon  it.  The  larger  sum  of  £800,000  was 
demanded  ;  the  Hebrews  refused  to  increase  their  oflfer,  and  the  negotia- 
tion was  broken  off. 

The  promotion  of  Cromwell  to  the  Protectorate  once  more  excited 
the  hopes  of  the  exiled  Israelites,  The  fiivor  this  great  man  evinced 
towards  religious  toleration,  the  grandeur  of  disposition  which  led  hina 
to  the  support  of  principles,  requiring  two  centuries  even  partially  to  de- 
velop, Avas  not  overlooked.  In  1G54  the  French  ambassador  in  Holland, 
writing  to  the  French  minister  in  England,  says  :  "  A  Jew  of  Amsterdam 
informed  me  for  certain,  that  the  three  generals  of  the  fleet  have  pre- 
sented a  petition  to  his  highness  the  Protector,  to  obtain  that  their  nation 
may  be  received  in  England  to  draw  the  commerce  thither."  The  mind 
of  Cromwell  was  undoubtedly  aware  of  all  the  advantages  to  be  gained 
by  the  return  of  this  commercial  people.  Permission  was  given  to  Rabbi 
Menasseii  Ben  Israel  to  reside  in  London.  In  all  probability  this 
permission  was  made  with  the  view  of  testing  the  feelings  of  the  people. 
While  in  England  he  presented  a  petition  to  Cromwell,  praying,  for  the 
Jew,  a  free  exercise  of  his  religion,  a  2">ermission  to  exercise  the  faith  of 
his  fathers,  and  a  license  to  erect  synagogues  for  public  worship  ;  at  the 
same  time  he  appealed  to  the  trading  propensities  of  the  nation,  by  a 
declaration  to  the  Commonwealth,  exhibiting  the  advantages  which 
would  accrue  to  commerce  from  the  return  of  his  nation.  A  council 
was  appointed,  and,  in  the  fashion  of  the  time,  disputations  were  held. 
Those  who  were  supposed  to  be  most  interested  were  summoned  to  the 
debate.  Law,  trade  and  divinity  had  their  representatives.  The  first 
was  favorable,  the  second  undecided,  but  the  third  opposed  the  return  of 
this  people  with  all  the  rancor  of  an  ignorant  intolerance.  The  text- 
quoting  fashion  of  the  period — the  spirit  which  led  men  to  dispute  in 
conventicles,  and  wrest  words  from  their  right  meanings — the  narrow- 
ness which  only  regarded  the  Hebrew  as  the  outcast,  while  it  forgot  that 
he  had  been  the  favored  of  God — were  all  brought  into  full  exercise. 
For  four  days  were  texts,  which  had  been  uttered  in  a  more  genial  spirit, 
narrowed  and  perverted  to  party  feeling,  and  for  four  days  must  Crom- 
well's enlarged  mind  have  been  eminently  annoyed  by  the  prophetic 
denunciations  of  the  divinity  of  the  land.  At  last  it  appears  that  some- 
thing of  the  determined  spirit  which  had  displayed  itself  on  other 
fields,  cut  the  debate  short — Cromwell  telling  them,  in  very  plain  lan- 
guage, that  they  had  made  the  question  more  intricate  than  ever ; 
that  though  he  wished  no  more  reasoning,  he  yet  begged  an  interest  in 
their  prayers. 

No  definite  step  appears  to  have  resulted  from  this  conference,  and  the 
general  feeling  of  hostility  which  prevailed  against  the  return  of  the 
Hebrews  was  increased  by  the  discovery  of  a  somewhat  similar  proposi- 
tion from  their  Asiatic  brethren.     The  avowed  design  of  a  mission  from 


The  Protector's  Descent' — Goldsmitha^  Ilotes.  25 

some  of  their  rabbis  was,  the  establishment  of  a  company  to  trade  to  the 
Levant;  but  the  real  object  of  their  visit  appears  to  have  been,  an  exami- 
nation  of  the  pedigree  of  the  Protector,  in  hopes  of  tracing  a  Jewish 
origin,  and  of  proving  him  to  be  the  Messiah  after  whom  the  people 
yearned.  Whether  Cromwell  encouraged  this  idea  or  not  appears 
quite  uncertain ;  but  they  obtaioed  permission  to  repair  to  Cambridge 
and  examine  the  library.  They  then  went  to  Huntington,  the  birth- 
place  of  the  Protector,  to  investigate  his  descent.  Some  rumors  of  this 
design  soon  propagated,  and  Cromwell,  aware  of  the  ridicule  and  sar- 
casm to  which  he  would  be  rendered  liable,  ordered  them  to  return  to 
London,  from  which  place  they  soon  departed.  At  this  time,  however, 
the  Hebrews  obtained  admission  into  England,  and  in  1G89  they  must 
have  increased  considerably,  as,  in  a  petition  from  some  merchants,  com- 
plaining that  the  Jews  were  not  subject  to  the  alien  duty,  it  was  stated 
that  £10,000  were  lost  yearly  from  the  export  alien  duty  not  being- 
levied. 

The  next  resource  of  the  merchants,  after  the  violent  seizure  of  their 
treasure  by  "  the  royal  martyr,"  was  to  keep  their  cash  in  their  own 
houses.  To  do  this  they  were  obliged  to  trust  their  servants  and  ap- 
prentices. As  the  civil  Avar  advanced,  however,  the  love  of  fighting  often 
overcame  the  love  of  honesty,  and  they,  with  the  money  intrusted  to 
them,  disappeared. 

From  the  evil  arose  tho-remed)\  The  goldsmiths,  up  to  this  period, 
were  employed,  with  some  exceptions,  in  the  ordinary  way  of  their  voca- 
tion. They  were  a  rich  body,  and  it  was  natural  that  the  richest  should 
be  most  trusted.  Those  servants,  therefore,  Avho  yet  remained  in  charge 
of  their  master's  money,  lent  it,  at  4d.  per  cent,  per  diem,  to  the  goldsmith, 
who  saw  a  new  branch  of  business  opening,  and  caught  the  first  glimpse 
of  modern  banking.  The  troubles  of  the  time,  which  prevented  country 
gentlemen  from  keeping  their  rents  in  their  own  mansions,  made  them 
glad  to  remit  it  to  persons  of  responsibility.  The  goldsmith  was  equally 
glad  to  pay  a  small  interest,  with  the  prospect  of  lending  it  at  an  increased 
profit;  the  necessitous  merchant  applied  for  loans  at  a  high  usance; 
the  rich  deposited  their  cash,  for  security,  Avithout  interest ;  the 
widow  and  the  orphan  received  four  per  cent.';  and,  Avith  the  money 
thus  obtained,  the  goldsmith  Avas  able  to  increase  his  business  by  the 
somcAvhat  new  branch  of  discounting  bills. 

They  thus  became  money  borrowers  and  receivers  of  rents.  "  They 
lent  money  to  the  king  on  the  security  of  the  taxes.  The  receipts  they 
issued,  for  the  money  lodged  at  their  houses,  circulated  from  hand  to 
hand,  and  Avere  knoAvn  by  the  name  of  goldsmiths'  notes.  These  may  be 
considered  the  first  kind  of  bank  notes  issued  in  England." 

A  business,  at  once  profitable  and  safe,  increased  Avith  the  increase  of 
commerce,  and,  under  the  prosperous  sway  of  the  Protector,  must  have 
been  found  a  great  convenience.  The  goldsmiths  gradually  arose  in  repu- 
tation with  the  extension  of  their  transactions ;  they  took  the  lead  in 
monetary  business  ;  and,  as  they  alloAved  interest  on  cash,  however  short 
the  period  of  the  loan,  it  must  have  been  found  an  important  assistance 
to  all  those  Avho  required  a  secure  depositary  for  their  gains. 

The  modern  principles  of  banking  may  thus  be  traced  to  the  increased 


26  History  of  the  Bank  of  England. 

importance  of  business ;  to  tbc  additional  facilities  required  Ly  tbe  latter, 
and  to  the  disturbed  spirit  of  tlie  time,  wbicb  gave  to  it  an  impulse  it 
migbt  otlicrwise  bave  wanted.  Maitland  remarks  tbat,  even  in  bis  day, 
tbere  were  several  eminent  bankers  wbo  united  to  tbe  department  of 
banking  tbe  keeping  of  goldsmitbs'  sbops,  altbougb  tbey  were  more  fre- 
quently separate.  Great  part  of  tbe  wealtb  of  Sir  Tuomas  Gresiiam 
was  found  at  bis  deatb  to  be  comprised  in  gold  cbains  ;  wbile,  in  ITjOS, 
a  German  writes,  tbat  be  visited  England,  and  saw,  in  Lombard-street, 
"  all  sorts  of  gold  and  silver  vessels  exposed  to  sale,  as  well  as  ancient 
and  modern  coins,  in  sucb  quantities  as  must  surprise  a  man  tbe  first 
time  be  sees  and  considers  tbem." 

Tbe  celebrity  of  tbe  first  banking-bouse  belongs,  by  common  consent, 
to  Mr.  Fkakcis  Child.  Tbis  gentleman,  wbo  was  tbc  fatber  of  bis  pro- 
fession and  possessed  of  large  property,  began  business  sbortly  after  tbe 
restoration,  lie  was,  originally,  apprentice  to  William  Wheeler,  gold- 
smitb  and  banker,  Avbose  sbop  was  on  tbe  site  of  tbe  present  banking- 
bouse.  Tbe  foundation  of  bis  importance  arose  from  tbe  good  old 
fasbion  of  marrying  bis  master's  daugbter,  and  tbrougb  tbis  be  succeeded 
to  tbe  estate  and  business,  Tbc  latter  be  subsequently  confined  entirely 
to  tbe  banking  department. 

Tbe  principles  on  wbicb  be  founded  it,  and  the  remarkable  clauses  in 
bis  will,  by  wbicb  be  regulated  its  future  conduct,  are  well  known.  It 
bas  maintained  to  tbe  present  day,  amid  all  tbe  cbances  and  cbauges  of 
banking,  tbe  same  position  and  tbe  same  respectability  wbicb  be  be- 
queatbed  it. 

By  tbe  year  1667  tbe  banking  business,  wbicb  bad  increased  in  some 
proportion  witb  commerce,  bad  attained  considerable  importance. 

Wealtby  bodies  must  always  bold  an  important  position  in  tbe  State, 
and,  under  a  needy  government,  an  influential  one.  Tbe  luxury  of  tbe 
court  of  tbe  second  Charles,  combined  witb  bis  careless  disposition, 
compelled  bim  to  bave  recourse  to  tbe  goldsmitb.  Tbe  goldsmitb  made 
bim  pay  interest  and  premium  to  an  enormous  extent.  Tbus,  a  great 
portion  of  tbe  supplies  voted  by  tbe  bouses  of  Parliament  came  into  tbe 
possession  of  tbis  increasing  body.  Tbe  benefit  wbicb  sbould  bave  been 
derived  from  tbe  parliamentary  grants,  w-as  largely  absorbed  by  tbe  ne- 
cessity wbicb  unfortunately  existed  of  obtaining  tbe  money  immedi- 
ately. And  bow  could  sucb  necessities  fail  to  exist,  wben  tbe  dissipation 
of  Charles  produced  tbose  scenes  of  extravagance  wbicb  were  a  disgrace 
to  tbe  king  and  a  dishonor  to  tbe  people  !  The  pages  of  Pepys  and  tbe 
private  records  of  tbe  reign,  lately  published,  tend  to  prove  that  tbe  pen- 
sioner of  Louis  QuATOKZE  must  have  been  utterly  and  completely  at  tbe 
mercy  of  tbe  usurer. 

In  a  curious  pamphlet,  published  in  1676,  it  may  be  seen  that  the 
goldsmitb  took  great  adv^antage  of  the  necessities  of  Charles.  The 
monarch  who  lives  beyond  his  revenue  must  pay  tbe  same  penalty  as  tbe 
subject  who  outruns  his  income.  He  found  himself  at  the  mercy  of  tbe 
rich  goldsmitb,  wbo  made  tbe  royal  debtor  pay  ten,  twenty  and  thirty 
per  cent,  for  accommodation,  wbile  he  allowed  only  six  per  cent,  for  the 
money  wbicb  went  to  alleviate  the  diflSculties  of  the  "  merry  monarch."  A 
business  so  profitable  induced  the  goldsmith  "  more  and  more  to  become 


First  Run  on  the  Bankers.  27 

lender  to  the  king,  to  anticipate  all  the  revenue,  to  take  every  grant  of 
Parliament  into  pawn  as  soon  as  it  was  given  ;  also,  to  outvie  each  other 
in  buying  and  taking  to  pawn  bills,  orders  and  tallies,  so  that,  in  effect, 
all  the  revenue  passed,  through  their  hands." 

The  extravagant  luxury  of  the  court,  however,  together  with  the  utter 
want  of  principle  of  Charles,  produced  a  nearly  fatal  result  upon  this 
important  interest.  The  imbecility  with  which  the  contest  with  Holland 
had  been  carried  on,  had  involved  the  nation  in  debt  and  dishonor. 

"  The  government  of  Charles,"  says  Mr.  T.  Babington  Macaulay,'^ 
"  had  suffered  a  succession  of  humiliating  disasters.  The  extravagance 
of  the  court  had  dissipated  all  the  means  which  Parliament  had  supplied 
for  the  purpose  of  carrying  on  offensive  hostilities.  It  was  determined 
to  wage  only  defensive  war  ;  and  even  for  defensive  war  the  vast  resources 
of  England  were  found  insufficient.  The  Dutch  insulted  the  British 
coast,  sailed  up  the  Thames,  took  Sheerness,  and  carried  their  ravages  to 
Chatham.  The  blaze  of  the  ships  burning  in  the  river  was  seen  at  Lon- 
don ;  it  was  rumored  that  a  foreign  army  had  landed  at  Gravesend ;  and 
military  men  seriously  proposed  to  abandon  the  tower.  To  such  a  depth 
of  infamy  had  a  bad  administration  reduced  that  proud  and  victorious 
community,  which,  a  few  years  before,  had  dictated  its  pleasure  to  Ma- 
zarine, to  the  States  General,  and  to  the  Vatican." 

The  people,  accustomed  to  the  secure  reign  of  Cromwell,  were  in 
utter  consternation.  The  moneyed  portion  of  the  community  were 
seized  with  a  panic.  The  country  was  in  danger.  London  itself  might 
be  invaded.  What  security  was  there,  then,  for  the  money  advanced  to 
the  crown  ?  The  people  Hocked  to  their  debtors  ;  they  demanded  their 
deposits ;  and  London  witnessed  the  first  run  upon  the  hankers. 

The  fears  of  the  people  proved  fallacious,  as  the  goldsmiths  met  all 
demands  made  upon  them.  Confidence  was  restored  by  a  proclamation 
from  the  king,  stating  that  the  demands  on  the  exchequer  should  be  met 
as  usual ;  and  the  run  ceased. 

From  this  period  up  to  16'72,  the  goldsmiths  continued  their  money- 
making  trade.  The  difficulties  of  Charles  had  increased ;  he  wanted 
money  without  the  aid  of  Parliament.  He  was  ambitious  of  absolute 
power ;  and  his  reign  had  been  a  succession  of  abortive  attempts  to  ob- 
tain it. 

The  infamous  cabal  ministry  were  in  office ;  nothing  was  too  bad  for 
them  to  attempt.  If  there  were  some  palliations  for  Charles  I.  when 
he  seized  the  money  deposited  in  the  mint,  what  can  be  urged  for  Charles 
II.  ?  His  throne  was  secure  ;  his  person  popular ;  money  was  freely  ad- 
vanced to  him  on  the  security  of  his  revenues.  No  necessity  of  the 
monarch  justified  the  act  we  have  to  record.  Charles  I.,  under  the 
pressure  of  unexampled  necessity,  had  made  a  forced  loan.  Charles  IL, 
to  gratify  his  immoderate  passions,  ordered  the  exchequer  to  be  closed 
and  no  payments  made.  Were  this  not  vouched  for  by  contemporary  his- 
tory, we  should  hesitate,  as  we  now  blush,  to  recite  it. 

The  relation  of  Hume  is  worthy  repeating.  "  The  king  had  declared 
that  the  staff  of  treasurer  was  ready  for  any  one  that  could  find  an  expe- 

*  For  Macaulay's  chapter  on  the  Bank,  see  Appendix  to  this  volume. 


28  tlistortj  vf  the  Bank  of  England. 

dient  for  supplying  the  present  necessities.  Shaftesbury  dropped  a  hint 
to  Clifford,  which  the  latter  immediately  seized  and  carried  to  the  king, 
who  granted  him  the  promised  reward,  together  with  a  peerage.  This 
expedient  was  the  shutting  up  of  the  exchequer,  and  the  retaining  of  all 
the  payments  which  should  be  made  into  it. 

"  It  had  been  usual  for  the  bankers  to  carry  their  money  to  the  ex* 
chequer,  and  to  advance  it  on  security  of  the  funds,  by  which  they  were 
afterwards  reimbursed  when  the  money  was  levied  on  the  public  ;  the 
bankers  by  this  traffic  got  eight,  sometimes  ten  per  cent.,  for  sums  which 
either  had  been  consigned  to  them  without  interest,  or  which  they  had 
borrowed  at  six  per  cent. ;  profits  which  they  dearly  paid  for  by  this 
egregious  breach  of  public  faith.  The  measure  was  so  suddenly  taken 
that  none  had  Avarning  of  the  danger ;  a  general  confusion  prevailed  in 
the  city,  followed  by  the  ruin  of  many;  the  bankers  stopped  payment; 
the  merchants  could  answer  no  bills  ;  distrust  took  place  every  where ; 
and  men  full  of  dismal  apprehensions  asked  each  other,  what  must  be 
the  scope  of  those  mysterious  counsels,  whence  the  Parliament  and  all 
men  of  honor  were  excluded  ;  and  which  commenced  by  the  forfeiture 
of  public  credit,  and  an  open  violation  of  the  most  solemn  engage* 
ments." 

The  goldsmiths  were  ruined,  and  their  clients  ruined  with  them.  Both 
had  fallen  by  an  act  which  stamped  the  monarch  and  his  minions  with 
infamy.  But  a  general  burst  of  honest  indignation  arose.  The  large 
sum  of  one  million  three  hundred  thousand  pounds  affected,  directly  or 
collaterally,  the  remotest  provinces  of  the  kingdom.  The  bankers  were 
besieged  ;  but  they,  innocent  of  this  great  transgression,  could  yield  no 
redress.  A  thousand  families  were  deprived  of  bread.  The  widow  and 
the  orphan  suffered  with  the  merchant  and  the  trader.  The  universal 
feeling  which  spread  throughout  the  length  and  breadth  of  the  land,  had 
it  been  resolved  into  words,  Avould  have  uttered,  with  one  loud  voice,  in 
the  solemn  warning  of  the  psalmist,  "  Put  not  your  trust  in  princes." 
The  press  wa-s  resorted  to,  and  language,  stronger  than  the  Stuarts  liked 
or  usually  permitted,  was  boldly  circulated  among  the  people.  Several 
pamphlets,  and  one  octavo  volume,  were  published,  and  it  is  a  proof  of 
the  general  feeling  of  the  nation,  that  one  writer  ventured  to  say,  "A 
step  of  this  kind  could  proceed  from  nothing  less  than  a  resolution  of  the 
court  to  borrow  no  more  hereafter,  but  to  take." 

The  outcry  assumed  so  much  importance,  that  Charles  was  compelled 
to  yield,  and  we  learn  that  six  per  cent.,  out  of  the  hereditary  excise,  was 
paid  for  this  sum  during  the  remainder  of  his  reign.  It  is  a  curious  cir- 
cumstance that,  only  two  years  after  this,  the  king  was  able  to  borrow 
money  at  eight  per  cent.,  being  nominally  the  same  rate  of  interest  charged 
before  that  event.  The  principal  was  never  repaid.  It  was,  however, 
made  part  of  the  national  debt  by  William  ;  this  act  was  confirmed  by 
Anne,  and  the  stock  ultimately  became  part  of  the  celebrated  South  Sea 
Fund. 

We  abridge  from  "  Knight's  Pictorial  History  of  England,"  a  remarka- 
bly clear  and  succinct  account  of  the  progTess  of  the  debt. 

"Interest  had  been  originally  paid  upon  this  sum  at  six  per  cent,  up 
to  the  last  year  of  Charles'  reign.     From  which  time  no  provision  was 


Interest  Allowed^  29 

made  for  it  till  1701,  the  last  of  William's  reign,  when  interest  was 
granted  on  the  whole  from  1705,  at  three  per  cent.,  and  the  principal 
made  redeemable  on  payment  of  half  its  amount.  The  entire  amount*  to 
which  the  unfortunate  bankers  and  merchants  were  plundered  by  this 
arrangement  exceeded  three  millions.  The  £664,263  thus  ultimately 
awarded,  in  satisfaction  of  equitable  claims  to  six  times  the  amount,  was 
called  the  bankers'  debt,  and  still  remains  undischarged  with  other  public 
debts,  of  which  it  may  be  regarded  the  foundation." 

*  The  details  connected  with  the  English  national  debt  possess  much  interest, 
-and  we  propose  to  group  those  figures  which  are  most  frequently  required  for  gene- 
ta\  reference.  The  following  table  is  extracted  from  a  parliamentary  return  granted 
on  the  motion  of  Lord  Goderich,  in  1859,  which  enters  fully  into  all  particulars  of 
the  national  debt,  and  occupies  upwards  of  a  hundred  pages,  distinguishing  the 
years  of  peace  or  war.  The  first  item  is  in  1691,  when  there  was  an  unfunded  debt 
of  £3,130,000.  No  funded  debt  existed  until  1694,  when  it  commenced  with  the 
comparatively  trifling  sum  of  £1,200,000,  the  total  amount  of  funded  and  unfunded 
debt  in  that  year  being  £6,734,297.     Th«  epochs  selected  below  furnish  abundant 

matter  fer  reflection : 

Annual 
Years.  War  or  Peace.  National  Debt.  Interest. 

i691,....War  with  France, £3,130,000  ..  £232,000 

1697, Peace  of  Ryswick, 14,522,925  ..  1,322,519 

1702, "War  of  the  Spanish  succession, 12,767,226  ..  1,215,324 

1713, Peace  of  Utrecht, 34,699,847  ..  3,004,287 

1718, War  with  Spain, 40,379,684  ..  2,965,889 

1721, Peace, 54,405,108  ,.  2,855,380 

1739, War  of  right  of  search  with  Spain, 46,613,883  ..  2,030,884 

1742, War  of  the  Austrian  succession, 51,847,323  ..  2,157,136 

1748 Peace  of  Aix-la-Chapelle, 75,812,132  ..  3,165,766 

1756, Commencement  of  the  seven  years'  war, . . .     74,575,025  . .  2,753,566 

1763, Termination  of  the  seven  years'  war, 132,716,049  . .  5,032,733 

1775, Commencement  of  war  with  America, 126,842,811  ..  4,703,519 

1783, Termination  of  war  with  America, 231,843,631  . .  9,065,585 

1793,.. .  .Commencement  oi  first  revolutionary  war 

with  France, 247,874,434  ..  9,711,238 

1802, Peace  of  Amiens, 537,653,008  . .  20,268,551 

1803 Second  revolutionary  war  with  France, 547,732,796  . .  20,812,962 

1815, Termination  of  the  French  and  American 

wars, 861,039,049  ..  32,646,618 

1854, War  with  Russia, 775,215,519  ..  27,363,889 

1856, . . .  .Termination  of  war  with  Russia, 808,108,722  . .  28,550,039 

1859, Peace, 805,078,554  ..  28,204,299 

These  figures  speak  volumes.  It  is  war,  and  war  alone,  that  has  saddled  England 
with  this  mountain  of  debt,  equivalent,  at  this  moment,  to  four  thousand  millions  of 
dollars,  at  3^  per  cent,  interest.— J.m,  £d. 


30  History  of  the  Bank  cf  England. 


CHAPTER    III. 

NATIONAL  BANK  EEQUIRED — BANK  OF  CREDIT SPECULATION  IN  1694— BUBBLE  COMPANIES 

NEW     mVEE      COMPANY BANK      OF     ENGLAND WILLIAM      PATEESON BUCCANEERS     OF 

DAEIEN — SCOTTISH   ENTUUSLVSM — PATERSON'S  LIBEEALITY — THE   DARIEN   EXPEDITION — 
ITS  FAILUEE GREATNESS  OF  THE  SCHEME FATE  OF  THE  PROJECTOR. 

Thk  important  position  assumed  by  England  towards  the  middle  of  tlie 
seventeenth  centiir}^,  renders  the  absence  of  a  national  bank  somewhat 
surprising.  Under  the  sagacious  government  of  Cromwell,  the  nation 
had  increased  in  commercial  and  political  greatness ;  and  although  several 
projects  were  issued  for  banks,  one  of  which  was  to  have  branches  in 
every  important  town  throughout  the  country,  yet  a  necessity  for  their 
formation  not  being  absolutely  felt,  the  proposals  were  dismissed.  Dur- 
ing the  Protectorate,  however.  Parliament,  taking  into  consideration  the 
rate  of  interest,  which  was  higher  in  England  than  abroad,  and  that  trade 
was  thereby  rendered  comparatively  disadvantageous  to  the  English  mer- 
chant, reduced  the  legal  rate  from  eight  to  six  per  cent.,  and  this  measure, 
although  it  had  been  carried  by  the  Parliament  of  Cromwell,  almost 
every  act  of  which  proved  odious  in  the  eyes  of  the  Stuarts,  was  never- 
theless confirmed  by  the  legislature  of  Charles  II.  In  1546,  the  pay- 
ment of  interest  had  been  rendered  legal,  and  fixed  at  ten  per  cent.  In 
1624,  the  rate  had  been  reduced  to  eight  per  cent. ;  and  with  the  advance 
of  commercial  prosperity  it  has  been  found  advisable  to  lower  it  still  further. 

There  were  many  reasons  for  the  establishment  of  a  national  bank.  It 
was  necessary  for  the  sake  of  a  secure  paper  currency.  It  was  required 
for  the  support  of  the  national  credit.  It  was  desirable  as  a  method  of 
reducing  the  rate  of  interest  paid  by  the  State  ;  a  rate  so  high  that,  ac- 
cording to  Anderson,  men  were  induced  to  take  their  money  out  of  trade 
for  the  purpose  of  securing  it ;  an  operation  "  big  with  mischief."  The 
truth  is,  that  the  times  required  it.  The  theorist  may  prove  to  demon- 
stration the  perfection  of  his  theory ;  the  speculator  may  show  the  cer- 
tainty of  its  success ;  but  unless  it  be  a  necessity,  called  for  by  the  onward 
progress  of  society,  it  must  eventually  fall  to  the  ground. 

That  the  want  of  such  an  establishment  was  felt,  is  certain.  But  as 
such  firms  as  Childs — the  books  of  whom  go  back  to  the  year  1620,  and 
refer  to  prior  documents — Hoares,  dating  from  1680,  and  Snows,  from 
1685 — were  able  to  assist  the  public  demand,  although  at  the  exorbitant 
interest  of  the  period,  it  does  not  occasion  so  much  surprise  that  the  at- 
tempt made  to  meet  the  increasing  requirements  of  trade  proved  iusufii- 
cicnt.  In  1678,  however,  sixteen  years  previous  to  the  foundation  of  the 
Bank  of  England,  "  proposals  for  a  large  model  of  a  bank"  were  published, 
and  in  1683,  a  "National  Bank  of  Credit"  was  brought  forward.  In  a 
rare  pamphlet,  entitled  "  Bank  credit ;  or,  the  usefulness  and  security  of 
the  bank  of  credit  examined,  in  a  dialogue  between  a  country  gentleman 
and  a  London  merchant,"  this  idea  is  warmly  defended.  It  was,  how- 
ever, simply  to  have  been  one  of  credit ;  nor  was  it  proposed  to  form  a 


Bank  of  Credit.  31 

bank  of  deposit,  although  by  the  following  remark  of  the  country  gentle- 
man, it  is  evident  that  such  an  establishment,  on  a  secure  scale,  was 
desirable.     He  says : 

"  Could  they  not,  without  damage  to  themselves,  have  secured  the 
running  cash  of  the  nobility,  gentry,  merchants  and  traders  of  this  city 
and  kingdom,  from  all  hazard,  which  would  have  been  a  great  benefit  to 
all  concerned,  who  know  not  where  to  deposit  their  cash  securely." 

To  this,  which  time  has  proved  to  be  a  reasonable  suggestion,  the  fol- 
lowing reply  is  made  by  the  London  merchant : 

"  They  are  unwilling  to  meddle  with  money,  because  the  scarcity  of  it 
would,  perhaps,  by  ignorant  or  malicious  men,  be  imputed  to  them. 
Possibly,  for  the  sake  of  ease  and  convenience,  they  may  be  induced  to 
receive  and  secure  the  running  cash  of  such  as  shall  desire  it,  yet  dealing 
in  money  is  not  the  business  they  purpose." 

One  of  the  objects  was,  "that  tradesmen,  when  they  have  a  considera- 
ble quantity  of  goods  or  wares  made,  may,  by  the  help  of  this  bank,  deposit 
their  goods  by  raising  a  credit  on  their  own  dead  stock,  employ  their 
servants,  and  increase  their  trade,  till  they  get  a  good  market,  instead  of 
selling  them  at  a  loss." 

In  other  words,  this  bank  was  to  act  as  a  great  capitalist  for  the  mer- 
chant, and  enable  the  speculative  man  to  inflict  on  the  country  the  evils 
of  over-trading.  However  desirable  such  an  establishment  may  be  as  a 
resource  on  an  emergency,  it  is  far  from  being  so  ordinarily,  as  it  would 
invariably  tend  to  increase  the  mischief  arising  from  undue  speculation. 

The  directors  proposed  also,  to  encourage  any  "  ingenious  invention" 
tending  to  the  promotion  of  linen,  woollen,  silk,  lace  or  other  useful 
manufactures. 

The  danger  of  forgery,  a  fearful  question,  and  involving  many  interests, 
is  met  by  a  reply  of  which  time  has  unhappily  proved  the  fallacy.  "  I 
am  well  assured,"  calmly  and  confidently  replies  the  London  merchant, 
"  that  the  bills  are  so  contrived,  that  it  is  morally  impossible  that  they 
should  be  counterfeited."  The  pages  of  the  Newgate  Calendar  afibrd  a 
melancholy,  but  conclusive  reply  to  this  assertion. 

After  much  trouble  this  bank  of  credit  was  established  at  Devonshire 
House,  in  Bishopsgate-street.  Its  object,  as  we  have  related,  being  prin- 
cipally to  advance  money  to  tradesmen  and  manufacturers  on  the  security 
of  goods.  Three-fourths  of  the  value  was  lent  on  these,  and  bills  for  their 
amount  given  to  the  depositor. 

In  order  to  render  these  bills  current,  an  appointed  number  of  persons 
in  each  trade  was  formed  into  a  society  to  regulate  commercial  concerns. 
Any  individual  possessed  of  such  bills  might,  therefore,  obtain  from  this 
company  goods  or  merchandise,  with  as  much  ease  as  if  they  offered 
current  coin. 

The  bank  of  credit  does  not  appear  to  have  flourished.  The  machin- 
ery was  too  complicated,  and  the  risk  of  depreciation  in  the  value  of 
manufactures  too  great.  It  was  next  to  impossible  for  such  a  company 
to  exist,  after  the  Bank  of  England  came  with  its  low  discounts  and  free 
accommodations. 

The  wild  spirit  of  speculation,  that  spirit  which  at  various  periods  has 
created  fearful  crises  in  the  commercial  world,  commenced  in  1694.  The 


32  History  of  the  Bank  of  England. 

fever  whicli  from  time  to  time  has  flushed  the  mind  of  the  moneyed 
man,  and  given  a  fierce  excitement  to  the  almost  penniless  adventurer, 
was  then  and  in  the  following  year  in  full  operation.  The  great  South 
Sea  scheme  in  1720,  which  it  will  be  our  melancholy  duty  to  refer  to,  ia 
ordinarily  considered  the  earliest  display  of  this  reckless  spirit.  But  a 
quarter  of  a  century  before,  equal  ingenuity  and  equal  villainy  were  ex- 
ercised. Obscure  men,  whose  sole  capital  was  their  enormous  impudence, 
invented  similar  schemes,  promised  similar  advantages,  and  used  similar 
arts  to  entice  the  capitalist,  which  were  employed  with  so  much  success 
at  a  later  period.  The  want  of  a  great  banking  association  was  sure  to 
be  made  a  pretext.  Two  "  land  banks"  and  a  "  London  bank,"  to  be 
managed  by  the  magistrates,  with  several  other  proposals,  were,  there- 
fore, put  promisingly  forward.  One  of  these  was  for  another  "  bank  of 
credit;"  and  a  pamphlet,  published  in  1694,  under  the  title  of  "Eng- 
land's Glory,"  will  give  some  idea  of  its  nature. 

"  If  a  person  desires  money  to  be  returned  at  Coventry  or  York,  he 
pays  it  at  the  office  in  London,  and  receives  a  bill  of  credit  after  their 
form,  written  upon  marble  paper,  indenturewise,  or  on  other  paper,  as 
may  be  contrived,  to  prevent  counterfeiting."  It  was  also  proposed  that 
government  should  share  the  profits ;  but  neither  of  the  projects  were 
carried  out. 

The  people  neglected  their  calling.  The  legitimate  desire  of  money 
grew  into  a  fierce  and  fatal  spirit  of  avarice.  The  arts  so  common  at  a 
later  day  were  had  recourse  to.  Project  begat  project.  Copper  was  to 
be  turned  into  brass.  Fortunes  were  to  be  realized  by  lotteries.  The 
sea  was  to  yield  the  treasures  it  had  engulphed.  Pearl  fisheries  were 
to  pay  impossible  per  centages.  "  Lottery  on  lottery,"  says  a  writer  of 
the  day,  "  engine  on  engine,  multiplied  wonderfully.  If  any  person  got 
considerably  by  a  happy  and  useful  invention,  others  followed  in  spite  of 
the  patent,  and  published  printed  proposals,  filling  the  daily  newspapers 
therewith,  thus  going  on  to  jostle  one  another,  and  abuse  the  credulity 
of  the  people." 

Anderson,  the  historian  of  English  commerce,  says,  "  the  projectors 
of  these  made  a  great  noise  in  town,  for  drawing  on  people  to  join  with 
them,  making  use  of  various  tricks  and  stratagems.  At  first  they  pretend 
a  mighty  vein  of  gold,  silver  or  copper,  to  have  been  discovered  in  a 
piece  of  ground  of  their  knowledge  ;  then  they  agree  with  the  lord  or 
patentee  for  a  small  yearly  rent,  or  a  part  reserved  to  him,  to  grant  them 
a  lease  for  twenty-one  years,  to  dig  that  ground,  which  they  immediately 
fall  to,  and  give  out  it  is  a  very  rich  mine.  Next  they  settle  a  company, 
and  divide  it  usually  into  four  hundred  shares,  and  pretend  to  carry  on  the 
work  for  the  benefit  of  all  the  proprietors,  who,  at  the  beginning,  purchase 
shares  at  a  low  rate,  say  ten  or  twenty  shillings;  then  all  on  a  sudden  they  run 
up  the  share  to  £3,  £5,  £10  and  £16.  When  those  originally  and  princi- 
pally concerned  sell  out  their  interest,  and  by  this  and  other  under-hand 
dealings,  tricking  and  sharping  on  one  another,  the  whole  falls  to  the 
ground,  and  is  abandoned  by  every  body."  Thus  it  would  seem  that 
they  who  lived  in  the  "  good  old  times"  were  not  deficient  in  craft,  cun- 
ning and  duplicity. 

Amid  the  many  delusive  and  impracticable  schemes  were  two  impo'"' 


William  Pater  son.  33 

ant  projects,  -which  have  conferred  great  benefits  on  the  English  people. 
The  first  of  these  was  the  New  River  Company,  the  conception  of  Sir 
Hugh  Middleton  ;  the  second  was  the  corporation  of  the  Bank  of  Eng- 
land. Nature,  and  the  great  nations  of  antiquity,  suggested  the  former ; 
the  force  and  pressure  of  the  times  demanded  the  latter.  It  is  from 
such  demands  that  our  chief  institutions  arise.  By  precept  we  may  be 
taught  their  propriety  ;  by  example  we  may  see  their  advantages.  But 
until  the  necessity  is  personally  felt,  they  are  sure  to  be  neglected  ;  and 
men  wonder  at  their  want  of  prescience,  and  upbraid  their  shortsighted- 
ness, when,  with  a  sudden  and  sometimes  startling  success,  they  arise 
through  the  energy  of  another. 

William  Paterson,  one  of  those  men  whose  capacity  is  measured 
by  failure  or  success,  was  the  originator  of  the  new  bank  ;  and  it  is  per- 
haps unfortunate  for  his  fame  that  no  biography  exists  of  this  remarkable 
person.  As  the  projector  of  the  present  Bank  of  Scotland,  as  the  very 
soul  of  the  celebrated  Darien  Company,  and  as  the  founder  of  the  Bank 
of  England,  he  deserves  notice.  A  speculative  as  well  as  an  adventurous 
man,  he  proved  his  practicability  of  the  Darien  scheme  by  accompany- 
ing that  unfortunate  expedition  ;  and  the  formation  of  the  Bank  of  Eng- 
land was  the  object  of  his  desires  and  the  subject  of  his  thoughts  for  a 
long  time  previous  to  its  establishment. 

William  Paterson  was  born  in  Traillflatt,  in  the  county  of  Dum- 
fries, in  1658.  Having  been  educated  for  the  church,  he  indulged  a  na- 
turally adventurous  disposition  by  visiting  the  West  Indian  Islands,  under 
pretext  of  converting  the  Indians.  His  real  occupation  is  stated,  how- 
ever, to  have  been  very  different,  as  he  mingled  with,  and  perhaps  formed 
part  of  those  daring  buccaneers,  the  exploits  of  whom  form  so  romantic 
a  chapter  in  the  byways  of  history.  During  this  period  Paterson  made 
himself  thoroughly  acquainted  with  the  capabilities  of  the  Isthmus  of 
Darien,  better  known  as  the  Isthmus  of  Panama.  "  This  place,  which  is 
between  Mexico  and  Peru,"  says  a  modern  writer,  "  is  within  six  weeks' 
sail  of  most  parts  of  Europe,  the  East  Indies  and  a  part  of  China.  It  is 
in  the  heart  of  the  West  India  Islands,  and  not  far  from  North  America, 
It  is  one  of  the  best  situations  for  a  colony  from  a  trading  and  manufac- 
turing country  on  the  face  of  the  earth."  The  same  opinion  was  enter- 
tained by  Paterson,  who  must  have  been  thoroughly  acquainted  with 
the  position  and  natural  advantages  of  the  place,  and  from  his  youth  con- 
templated its  colonization.  "  The  expense  of  navigation  to  China,  Japan, 
the  Spice  Islands,  and  the  far  greatest  part  of  the  East  Indies  will  be 
lessened  more  than  half,  and  the  consumption  of  European  commodities 
and  manufactures  will  soon  be  more  than  doubled.  Trade  will  increase 
trade,  money  will  beget  money,  and  this  trading  world  shall  need  no 
more  to  want  work  for  their  hands,  but  will  rather  want  hands  for  their 
work,"  While  roving  about  the  beautiful  islands  of  the  western  Indies, 
Paterson  loved  to  listen  to  the  buccaneers,  who,  after  a  stormy  and 
eventful  career,  delighted  in  relating  the  glories  of  their  early  achieve- 
ments ;  and  with  memories  which  still  lingered  on  their  past  lives,  re- 
counted with  transport  the  ease  with  which  they  had  passed  from  one 
sea  to  another,  driving  before  them  the  plunder  they  had  acquired. 
From  them  he  heard  of  precious  metals  in  the  bowels  of  the  earth,  of 


34  History  of  the  Bank  of  England. 

fine  tracts  of  land  little  known  to  Europeans,  and  of  rivers  sparkling 
over  sands  of  gold.  The  romance  which  fired  the  imagination  of  the 
youth  was  productive,  in  the  maturity  of  his  manhood,  of  the  unfortunate 
Darien  expedition,  as  before  leaving  he  satisfied  himself  that  there  was 
one  portion  of  this  fine  country  which  still  belonged  to  the  Indians,  the 
original  proprietors  of  the  soil,  from  whom  it  had  never  been  alienated. 
The  situation  Avas  between  Portobello  and  Carthagena,  and  although 
under  a  tropical  sun,  the  air  was  temperate.  The  soil  also  was  rich  and 
productive,  yielding  almost  spontaneously  the  refreshing  fruits  of  a  warm 
and  luxuriant  climate. 

A  desire  to  participate  in  advantages  similar  to  those  enjoyed  by  the 
East  India  Company,  was  prevalent  among  many  commercial  nations, 
about  the  end  of  the  seventeenth  century.  This  feeling  being  noticed  by 
Paterson,  he  first  mentioned  his  project  to  the  English  people,  by  whom 
it  was  coldly  received.  He  then  proposed  it,  through  the  agency  of  a 
rich  Walloon  banker,  to  several  European  States,  but  without  success. 
On  his  return  to  London  he  formed  a  friendship  with  Mr.  Fletcher,  of 
Saltoun,  a  man  who  "  hated  England,  because  he  loved  Scotland  to  ex- 
cess." Struck  with  the  proposal,  the  advantages  of  which  he  was 
anxious  to  secure  for  his  country,  Fletcher  took  Paterson  to  Edin- 
burgh, and  introduced  him  to  the  minister  for  Scotland,  who,  with  the 
secretaries  of  State,  Avarmly  countenanced  the  project.  The  prospect  of 
participating  in  the  profits  of  the  East  India  Company  stirred  all  the  ac- 
cumulative propensities  of  human  nature.  Every  thought  of  a  nation, 
remarkable  for  an  absence  of  undue  speculation,  was  embarked  in  a 
scheme  which  promised  universal  riches.  "  The  phrensy,"  says  Sir 
John  Dalrtmple,  "  of  the  Scotch  nation  to  sign  the  solemn  league  and 
covenant,  never  exceeded  the  rapidity  with  which  they  ran  to  subscribe 
to  the  Darien  Company.  The  nobility,  the  gentry,  the  merchants,  the 
people,  the  royal  burghs,  without  the  exception  of  one,  and  most  of  the 
other  public  bodies,  subscribed.  Young  women  threw  their  little  for- 
tunes into  the  stock ;  widows  sold  their  jointures  to  get  the  command  of 
money  for  the  same  purpose."  Four  hundred  thousand  pounds — half 
the  cash  in  Scotland — was  subscribed.  To  this,  England  added  three 
hundred  thousand,  and  Hamburgh  and  Holland  two  hundred  thousand 
more. 

An  agreement  had  been  entered  into,  by  which  Paterson  was  to  be 
paid  two  per  cent,  on  the  stock,  and  three  per  cent,  on  the  profits ;  but, 
in  the  greatness  of  this  success,  he  tendered  a  discharge  of  both  claims — 
a  testimony  to  his  entire  disinterestedness.  In  doing  so,  Paterson  con- 
trived to  throw  a  grandeur  of  expression  over  a  simple  law  release.  "  It 
was  not  suspicion  of  the  justice  or  gratitude  of  the  company,  nor  a  con- 
sciousness that  my  services  could  ever  become  useless  to  them,  but  the 
ingratitude  of  some  individuals,  which  made  it  common  prudence  to  ask 
a  retribution  for  six  years  time,  and  ten  thousand  pounds  spent,  in  pro- 
moting the  establishment  of  the  company.  But  now  I  see  it  standing  on 
the  authority  of  Parliament,  and  supported  by  so  many  great  and  good 
men,  I  release  all  claim  to  that  retribution,  happy  in  the  noble  con- 
cessions made  to  me,  but  happier  in  the  return  I  now  make  for  it." 
The  Eno-lish  were  startled  at  the  enthusiasm  of  their  neicrhbors.     The 


Scottish  Enthusiaam — Darien  Expedition.  35 

East  India  Company  remonstrated.  The  Parliament  impeached  some  of 
their  countrymen  for  joining  it.  The  king  grew  alarmed,  and  said  "  he 
had  been  ill-advised  in  Scotland,"  changed  his  Scotch  ministry,  and  with- 
drew the  promised  aid.  The  Scottish  people,  far  from  being  depressed, 
were  animated  by  this.  They  regarded  the  profit  as  likely  to  be  greater ; 
undertook  the  vast  project  themselves  ;  and  neighboring  nations,  with 
surprise  and  respect,  saw  the  poorest  country  in  Europe  send  forth  the 
most  gallaot  and  numerous  colony  which  had  ever  passed  from  the  old  to 
the  new  world. 

The  26th  July,  1698,  is  a  day  memorable  in  the  annals  of  Scotland, 
when  twelve  hundred  persons — three  hundred  of  whom  were  men  of  birth 
and  influence — embarked  in  five  stout  vessels  from  Leith.  The  en 
tire  population  of  Edinburgh  thronged  to  witness  their  departure. 
Tears  mingled  with  smiles,  and  praises  of  their  courage  were  blended 
with  prayers  for  their  safety.  Many  a  fond  heart  looked  forward  with 
confident  anticipation ;  and  none  among  that  earnest  crowd  had  power 
to  weaken  the  present  joy  with  anticipations  of  future  sorrow.  Those 
who  had  been  refused  for  want  of  room,  hid  themselves  in  the  ships,  and 
clung  to  the  ropes  and  timbers,  imploring  permission  to  accompany  the 
expedition.  The  eyes  of  that  anxious  crowd  followed  the  white  sails  of 
the  vessels  as  they  left  the  harbor,  and  fev/  who  were  interested  in  their 
progress  left  the  pier  of  Leith  so  long  as  they  could  trace  the  course  of 
these  bold  adventurers. 

September  witnessed  their  arrival  at  the  proposed  colony.  Paterson 
honorably  purchased  land  of  its  Indian  possessors,  sent  messages  of 
amity  to  the  Spanish  settlers,  and,  to  his  eternal  honor,  he  who  at  an 
earlier  period  had  said,  "  A  people  and  their  industry  are  the  true  riches 
of  a  nation,"  proclaimed,  as  the  two  great  25rinciples  of  his  common- 
wealth, freedom  of  faith  and  freedom  of  trade  to  all  sects  and  to  all 
nations.  The  new  settlers  built  a  fort,  established  a  station,  and  conse- 
crated both  with  mingled  feelings  of  hope  and  love — hope  for  the  place 
where  they  had  cast  their  destinies — love  for  the  home  which  a  Scot 
never  forgets.  They  found  the  land  of  unequal  surface,  varied  by  swell- 
ing hills  and  fair  valleys,  abounding  with  rivers,  brooks  and  springs. 
Delighted  with  the  beauty  of  its  situation,  the  golden  sands  of  its  rivers, 
and  the  treasures  assigned  by  tradition,  which  Paterson,  at  a  later 
period,  had  witnessed,  they  worked  with  all  the  strong  good-will  of  set- 
tlers anxious  to  make  a  fruitful  harvest  from  the  fertile  soil,  and  the 
earnestness  of  men  willing  to  earn  their  bread  by  the  sweat  of  their 
bro-w.     And  as  the  followers  of  "  stout  Cortes," 

"  Silent  upon  a  peak  of  Darien," 

gazed  in  "  mute  surprise"  upon  the  broad  Pacific,  so,  upon  many  a  fair 
summer's  eve  did  the  companions  of  Paterson  find  themselves  on  the 
summit  of  the  loftiest  "  peak,"  gazing  through  the  clear  air  of  that  fine 
climate  towards  the  bleak  mountains  of  their  northern  home.  In  the 
watch-tower  which  they  had  built  upon  a  mountain  a  mile  above  the 
surface  of  the  sea,  Dalrymple  says,  they  often  sat,  enjoying  the  beauti- 
ful air  and  speculating  upon  their  future  prospects. 


36  History  of  the  Bank  of  England. 

The  first  letters  from  the  colony  were  written  with  enthusiasm.  "Tbe 
wealth,  fruitfulness,  health  and  good  situation  of  the  country  are  much 
above  our  expectation."  "  In  fruitfulness  this  country  seems  not  to  give 
place  to  any  in  the  world."  One  river  was  named  the  Golden  River. 
Another  place  was  called  the  Golden  Island.  The  seas  were  filled  with 
turtle.  Hunting,  fowling  and  fishing  wore  abundant.  Grand  and  stately 
trees,  without  any  underwood,  enabled  a  horseman  to  ride  for  miles  be- 
neath the  pleasant  shade,  so  acceptable  to  the  inhabitants  of  a  sultry 
climate.  "  Strong  in  body  and  hardy  in  habits,"  says  a  writer  in  "  Cham- 
bers' Journal,^''  they  behaved  dift'crcntly  to  the  effeminate  Spaniards  in 
a  similar  situation.  In  place  of  shrinking  with  disdain  from  the  labor 
which  could  alone  command  success,  the  Caledonian  settlers  nerved 
themselves  to  their  task.  Unhappily  their  stock  of  provisions  ran  low^ 
and  they  were  compelled  to  accept  the  hospitality  of  the  Indians,  who 
hunted  and  fished  to  supply  their  necessities.  Summer  brought  disease  ; 
provisions  grew  scarcer ;  the  other  colonists  were  forbidden  to  trade  with 
them.  With  a  deficient  supply  of  food,  their  numbers  daily  diminishing 
beneath  the  wasting  sun  of  a  tropical  climate,  the  bold  Scots  began  to 
shrink  from  the  dangers  they  had  dared.  But  worse  and  more  perilous 
evils  were  in  reserve.  The  fort  was  attacked  by  the  Spaniards  from  an- 
other portion  of  the  isthmus,  who  were  said  to  be  covertly  instigated  by 
the  English  monarch ;  their  numbers  were  thinned  by  disease  ;  the  rem- 
nant were  weakened  by  famine ;  and  the  unhappy  settlers,  commanded 
by  Captain  Campbell,  after  gallantly  supporting  the  credit  of  the  national 
name,  had  no  resource  but  to  surrender.  The  terms  were  favorable. 
The  honors  of  war  and  safety  for  personal  property  were  guaranteed 
them.  This,  added  perhaps  to  the  strong  home  feelings  which  a  Scot- 
tish exile  ever  cherishes,  decided  their  homeward  course ;  and  William 
Paterson,  the  first  to  leave  his  native  soil  at  Leith,  and  the  last  to  quit 
Darien,  saw,  with  an  anguish  almost  inexpressible,  the  failure  of  his 
cherished  scheme.  His  conduct  was  worthy  of  his  character.  A  letter 
of  the  period  says :  "  The  colonists  gave  Patersox  due  praise,  for  he 
had  been  diligent  and  true  to  the  end.  He  looks  more  like  a  skeleton 
than  a  man."  The  following  is  a  touching  picture,  drawn  by  his  own 
pen  :  "  When  the  rest  were  preparing  to  go  away,  I  was  left  alone  on 
shore  in  a  weak  condition.  None  visited  me,  except  Captain  DauMMONDy 
who,  with  me,  still  lamented  the  thoughts  of  our  leaving  the  place,  and 
prayed  God  that  we  might  hear  from  our  country  before  we  left  the 
coast."  The  utmost  precaution  could  not  have  guarded  against  the 
miseries  which  assailed  them.  So  weak  were  they  when  tbey  left  this- 
inhospitable  spot,  that  they  were  unable  to  weigh  the  anchor  of  the  leaky 
vessel  destined  to  convey  them  home.  Thirty  only  of  those  who  left  the 
pier  of  Leith,  with  such  bounding  yet  honorable  ambition,  again  set  foot 
on  their  native  soil.  The  projector,  though  seized  with  temporary  de- 
rangement during  the  voyage,  was  one  of  them.  With  him,  the  great- 
ness of  the  failure  was  in  proportion  to  the  vast  grandeur  with  which 
his  imagination  had  invested  the  scheme.  Not  a  family  in  Scotland 
escaped.  In  cash  or  kindred  all  suffered.  It  was  a  national  calamity,, 
which  fell  alike  on  peer  and  peasant.  That  it  was  not  the  mere  dream 
of  a  speculative  enthusiast^  is  certain  from  the  interest  taken  in  dis- 


Darien  Expedition — Fate  of  the  Projector.  3*7 

couraging  it.  That  it  was  eminently  practical,  is  almost  proved  from  a 
people,  so  cautious  as  the  Scotch,  adventuring  so  freely.  The  mere  fact 
that  Paterson  embarked  in  it,  if  not  a  direct  evidence  in  its  favor,  is  at 
least  a  direct  proof  of  his  faith  in  its  practicability.  It  appears,  indeed, 
to  have  been  a  remarkably  grand  scheme — grand  in  its  conception — 
grand  in  its  attempted  execution — and  was  worthy  the  mind  of  that  man 
with  whom  the  idea  of  the  Bank  of  England  originated. 

The  accounts  of  Paterson's  after  life  are  various.  One  historian  re- 
ports that  he  assisted  in  forming  the  union  between  England  and  Scot- 
land ;  that  he  was  recommended  by  the  Scottish  Parliament  to  Queen 
Anne  ;  and  that  he  received  an  appointment  in  connection  with  the 
South  Sea  scheme;  while  another  says,  "Paterson*  survived  many  years 
in  Scotland,  pitied,  respected,  but  neglected."  It  is  equally  doubtful 
whether  any  reparation  was  made,  as  Anderson  states,  that  for  his  great 
merit  and  public  services  the  House  of  Commons  voted  him  £18,241  10s. 
as  a  compensation ;  but  Sir  John  Dalrymple  writes,  "  After  the  union 
he  claimed  reparation  for  his  losses  from  the  equivalent  money  given  by 
the  English  to  the  Darien  Company,  but  got  nothing,  because,"  he  adds 
bitterly,  "a  grant  to  him  from  a  public  fund  would  have  been  only  an  act 
of  humanity,  and  not  a  political  job."  Thus  ended  the  attempt  of  the 
founder  of  the  Bank  of  England  to  colonize  Darien,  an  expedition  so  im- 
portant, and  at  the  same  time  so  disastrous,  that  it  lives  in  the  memory 
of  the  Scottish  peasant,  and  forms  a  part  of  his  familiar  superstitions  to 
the  present  day.  Robert  Chambers  says,  the  peasantry  of  Torwoodlee, 
in  Roxburghshire,  yet  believe  that  on  a  night — afterwards  ascertained  to 
be  that  of  the  death  of  the  laird's  son  at  Darien — all  the  bells  in  Tor- 
woodlee house  rang  violently  and  simultaneously,  without  the  appearance 
of  mortal  agency. 


*  Paterson's  conduct,  on  his  return  to  Scotland,  was  admirable.  He  sot  vigor- 
ously to  work  to  frame  a  new  plan  for  the  colony;  and  wrote,  in  1*701,  an  interest- 
ing work  hitherto  attributed  to  the  notorious  Johx  Law,  entitled  "Proposals  and 
Reasons  for  constituting  a  Council  of  Trade."  On  his  return  to  London,  in  1*701,  he 
met  with  a  friendly  reception  from  King  William  ;  but  the  death  of  that  monarch, 
shortly  afterwards,  cast  a  temporary  cloud  over  Paterson's  future  prospects.  He 
had  an  important  share  in  the  union  of  the  English  and  Scottish  Parliaments,  as 
able  tracts  from  his  pen  still  attest ;  he  was  unremitting  in  his  endeavors  to  relievo 
the  distress  of  his  native  country ;  he  had  a  sharp  controversy  with  John  Law  on 
paper  money;  and  was  elected  member  of  Parliament  for  Dumfries,  in  1708.  At 
the  treaty  of  Union,  an  indemnity  in  favor  of  Paterson  was  recommended  to  Queen 
AnnEj  by  the  Scottish  Parliament,  in  consideration  of  his  losses  in  connection  with 
the  Darien  company,  and  of  his  "  carrying  on  other  matters  of  a  public  nature, 
much  to  his  country's  service."  George  I.  had  ascended  the  throne,  however, 
before  this  indemnity  was  gained.  The  remainder  of  his  years  were  spent  at 
Westminster,  in  the  metropolis,  in  unavailing  hostility  to  the  ruinous  schemes  of  his 
relative  and  old  financial  foe,  John  Law.  Paterson  died  in  January,  1*719. — Ency. 
Brit.  vol.  xvii.  See  William  Paterson,  the  Merchant  Statesman  and  Founder  of  the 
Bank  of  England,  his  Life  and  Trials,  by  S.  Bannister,  Edinburgh,  1858.  Paterson's 
biographer,  who  has  industriously  collected  all  available  information  regarding  him, 
also  advertises  The  Writings  of  William  Paterson,  with  a  Biographical  Introduction, 
2  vols.  8t'o.,  1858. 


38  History  of  the  Bank  of  England. 


CHAPTER   IV. 

OPPOSITIOX     TO     THE    BAXK SCARCITY    OF    SUPPLIES DISTRESS   OF    THE    ARMY VARYING 

OPINIONS EST.VBLISHMEXT    OF   THE   BANK ANALYSIS    OF    THE    ACT BANK    AT   GROCERS* 

HALL BENEFICIAL   EFFECTS TRIAL  OF  THE  BANK WILL  OF  THE  BANK DEATH    OF  THE 

FIRST   DEPUTY-GOVERNOR XEALOUSY    OF    THE    GOLDSMITHS. 

From  that  political  change  whicli  Las  been  so  justly  termed  the  "great 
revolution,"  to  the  establishment  of  the  Banlc  of  England,  the  new  gov- 
ernment were  in  constant  difficulties;  and  the  ministerial  mode  of  pro- 
curing money  was  degrading  to  a  great  people.  The  duties  in  support 
of  the  war  waged  for  liberty  and  protestantism  were  required  before  they 
were  levied.  The  city  corporation  was  usually  applied  to  for  an  advance; 
interest,  which  varied  probably  according  to  the  necessity  of  the  borrower 
rather  than  to  the  real  value  of  money,  was  paid  for  the  accommodation. 
The  officers  of  the  city  went  round  in  their  turn  to  the  separate  wards, 
and  re-borrowed  in  smaller  amounts  the  money  they  had  advanced  to  the 
State.  Interest  and  premiums  were  thus  often  paid  to  the  extent  of  twen- 
ty-five and  even  thirty  per  cent.,  according  to  the  exigency  of  the  case, 
and  the  trader  found  his  pocket  filled  at  the  expense  of  the  public.  Mr. 
Paterson  gives  a  graphic  description  :  "  The  erection  of  this  famous 
bank  not  only  relieved  the  ministerial  managers  from  their  frequent  pro- 
cessions into  the  city,  for  borrowing  of  money  on  the  best  and  nearest 
public  securities,  at  ten  or  twelve  per  cent,  per  annum,  but  likewise  gave 
life  and  currency  to  double  or  treble  the  value  of  its  capital  in  other 
branches  of  public  credit,  and  so,  under  God,  became  the  principal  means 
of  the  success  of  the  campaign  in  1695 :  as  particularly  in  reducing  the 
important  fortress  of  Namur,  the  first  material  step  towards  the  peace  con- 
cluded in  1697." 

To  remedy  this  evil  the  Bank  of  England  was  projected,  and,  after  much 
labor,  William  Paterso^t,  aided  by  Mr.  Michael  Godfrey,  procured 
from  government  a  consideration  of  the  proposal.  The  k'ng  was  abroad 
when  the  scheme  Avas  laid  before  the  council,  but  the  que  ,n  occupied  his 
place.  Here  considerable  opposition  occurred.  Paterson  found  it  more 
difficult  to  procure  consent  than  he  anticipated,  and  all  those  who  feared 
an  invasion  of  their  interests  united  to  stop  its  progress.  The  goldsmith 
foresaw  the  destruction  of  his  monopoly,  and  he  opposed  it  from  self-in- 
terest. The  Tory  foresaw  an  easier  mode  of  gaining  money  for  the  gov- 
ernment he  abhorred,  with  a  firmer  hold  on  the  people  for  the  monarch 
he  despised ;  and  his  antagonism  bore  all  the  energy  of  political  parti- 
sanship. 

The  usurer  foresaw  the  destruction  of  his  oppressive  extortion,  and  he 
resisted  it  with  the  vigor  of  his  craft.  The  rich  man  foresaw  hi?  profits 
diminished  on  government  contracts,  and  he  vehemently  and  vi^  tuously 
opposed  it  on  public  principles.  Loud,  therefore,  were  the  outcries,  and 
great  the  exertions  of  all  parties,  when  the  bill  was  first  introduced  in  the 
House  of  Commons.     But  outcries  are  vain,  and  exertions  futile  in  oppo- 


Opposition  to  the  Bank.  39 

sition  to  a  dominant  and  powerful  party.  A  majority  bad  been  secured 
for  the  measure,  and  they  who  opposed  its  progress  covered  their  defeat 
with  vehement  denunciations  and  vague  prophecies.  The  prophets  are  in 
their  graves,  and  their  predictions  only  survive  in  the  history  of  that 
establishment,  the  downfall  of  which  they  proclaimed.  "  The  scheme  of 
a  national  bank,"  says  Smollett,  "had  been  recommended  to  the  minis- 
try for  the  credit  and  security  of  the  government,  and  the  increase  of 
trade  and  circulation.  AVilliam  Paterson  was  author  of  that  which 
was  carried  into  execution.  When  it  was  properly  digested  in  the  cabi- 
net, and  a  majority  in  Parliament  secured,  it  was  introduced  into  the 
House  of  Commons.  The  supporters  said  it  would  rescue  the  nation  out 
of  the  hands  of  extortioners  ;  lower  interest ;  raise  the  value  of  land  ; 
revive  public  credit ;  extend  circulation  ;  improve  commerce  ;  facilitate 
the  annual  supplies,  and  connect  the  people  more  closely  with  government. 
The  project  was  violently  opposed  by  a  strong  party,  who  affirmed  that 
it  would  become  a  monopoly,  and  engross  the  whole  money  of  the  king- 
dom ;  that  it  might  be  employed  to  the  worst  purposes  of  arbitrary 
power  ;  that  it  would  weaken  commerce  by  tempting  people  to  withdraw 
their  money  from  trade  ;  that  brokers  and  jobbers  would  prey  on  their 
fellow  creatures  ;  encourage  fraud  and  gaming,  and  corrupt  the  morals  of 
the  nation." 

Previous  governments  had  raised  money  with  comparative  ease  be- 
cause they  were  legitimate.  That  of  William  was  felt  to  be  precarious. 
It  was  feared  by  the  money-lender  that  a  similar  convulsion  to  the  one 
which  had  borne  him  so  easily  on  the  throne  of  a  great  nation,  might 
waft  him  back  to  the  shores  of  that  Holland  he  so  dearly  loved.  Thus, 
the  very  circumstances  which  made  supplies  necessary  also  made  them 
scarce.  '  In  addition  to  these  things  his  person  was  unpopular.  His 
phlegmatic  Dutch  habits  compared  unpleasingly  with  those  of  the  grace- 
ful Stuarts,  whose  evil  qualities  were  forgotten  in  the  remembrance  of 
their  showy  characteristics.  Neither  his  Dutch  followers  nor  his  Dutch 
manners  were  regarded  with  favor  ;  and  had  it  not  been  for  his  eminent 
kingly  capacity,  these  things  Avould  have  proved  as  dangerous  to  the 
throne  as  they  tended  to  make  the  sovereign  unpopular.  In  a  pamphlet, 
published  a  few  years  after  the  establishment  of  the  new  corporation,  is 
the  following  vivid  picture  of  this  monarch's  government:  "In  spite  of 
the  most  glorious  prince,  and  most  vigilant  general  the  world  had  ever 
seen,  yet  the  enemy  gained  upon  us  every  year ;  the  funds  were  run 
down,  the  credit  jobbed  away  in  Change  Alley,  the  king  and  his  troops 
devoured  by  mechanics  and  sold  to  usury,  tallies  lay  bundled  up  like  Bath 
faggots  in  the  hands  of  brokers,  and  stockjobbers;  the  Parliament  gave 
taxes,  levied  funds,  but  the  loans  were  at  the  mercy  of  those  men — the 
jobbers — and  they  showed  their  mercy,  indeed,  by  devouring  the  king 
and  the  army,  the  Parliament,  and  indeed  the  whole  nation  ;  bringing 
their  great  prince  sometimes  to  that  exigence,  through  inexpressible  ex- 
tortions that  were  put  upon  him,  that  he  has  even  gone  into  the  fields 
without  his  equipage,  nay,  even  without  his  army ;  the  regiments  have 
been  unclothed  when  the  king  has  been  in  the  field,  and  the  willing,  brave 
English  spirits,  eager  to  honor  their  country  and  follow  such  a  king,  have 
marched  even  to  battle  without  either  stockings  or  shoes,  while  his  scr- 


40  History  of  the  Bank  of  England. 

vants  have  been  every  day  working  in  Exchange  Alley  to  get  his  men 
money  of  the  stock  jobbers,  even  after  all  the  horrible  demands  of  dis- 
count have  been  allowed  ;  and  at  last,  scarce  50  per  cent,  of  the  money 
granted  by  Parliament  has  come  into  the  hands  of  the  exchequer,  and 
that  late,  too  late  for  service,  and  by  driblets,  till  the  king  has  been  tired 
with  the  delay."  This  is  a  strange  picture  ;  beating  even  Mr.  Paterson's 
account  of  the  "  processions  in  the  city"  to  gain  money,  and  adds  another 
convincing  proof  of  the  necessity  which  then  existed  for  some  establish- 
ment, capable  of  advancing  money  at  a  reasonable  rate,  on  the  security 
of  parliamentary  grants. 

The  scheme  proposed  by  William  Paterson  was  too  important  not 
to  meet  with  many  enemies,  and  it  appears  from  a  pamphlet  by  Mr.  God- 
frey, the  first  deputy-governor,  that  "  some  pretended  to  dislike  the  bank 
only  for  fear  it  should  disappoint  their  majesties  of  the  supplies  proposed 
to  be  raised."  That "  all  the  several  companies  of  oppressors  are  strangely 
alarmed,  and  exclaim  at  the  bank,  and  seemed  to  have  joined  in  a  confed- 
eracy against  it."  That  "  extortion,  usury  and  oppression  were  never  so 
attacked,  as  they  are  likely  to  be  by  the  bank."  That  "  others  pretend 
the  bank  will  join  with  the  prince  to  make  him  absolute.  That  the  con- 
cern have  too  good  a  bargain,  and  that  it  would  be  prejudicial  to  trade." 
In  Bishop  Burnet's  "History  of  his^Own  Times,"  we  read  an  evidence 
of  Mr.  Godfrey's  truth.  "  It  was  visible  that  all  the  enemies  of  govern- 
ment set  themselves  against  it  with  such  a  vehemence  of  zeal,  that  this 
alone  convinced  all  people  that  they  saw  the  strength  that  our  affairs 
would  receive  from  it.  I  had  heard  the  Dutch  often  reckon  the  great 
advantage  they  had  had  from  their  banks,  and  they  concluded  that  as 
long  as  England  remained  jealous  of  her  government,  a  bank  could  never 
be  settled  among  us,  nor  gain  credit  among  us  to  support  itself,  and 
upon  that  they  judged  that  the  superiority  in  trade  must  still  be  on  their 
side. 

"  The  advantages  that  the  king  and  all  concerned  in  tallies  had  from  the 
bank  were  soon  so  sensibly  felt,  that  all  people  saw  into  the  secret  rea- 
sons that  made  the  enemies  of  the  constitution  set  themselves  with  so 
much  earnestness  against  it."  Another  writer  says  :  "  Some  prophetic 
politicians  intimated  their  apprehensions,  that  an  institution  of  this  kind 
would  soon  become  a  mere  creature  of  government ;  that  care  would  be 
taken  to  give  it  none  but  government  operations;  that  on  any  sudden 
emergency,  or  even  general  panic,  the  bank  might  be  unable  to  answer 
the  demands  of  its  creditors,  and  that  the  failure  of  a  national  bank 
must  be  attended  with  national  ruin  ;  that  such  an  institution,  under  the 
influence  of  the  executive  government,  would  throw  more  real  power  into 
its  hands,  and  add  more  facility  to  the  projects  of  arbitrary  and  despotic 
ministers,  not  to  say  monarchs,  than  the  erection  of  a  citadel ;  that  the 
shutting  up  of  the  exchequer  in  the  last  reign  but  one,  after  the  bankers 
had  been  induced  to  deposit  the  money  there,  was  alone  sufRcient  to  mani- 
fest the  danger  of  trusting  any  mighty  mass  of  wealth  within  the  reach  of 
power  ;  and  that  from  the  time  this  new  wheel  was  added  to  the  machine 
of  government,  all  its  motions  would  be_  mysterious  and  unintelligible  ; 
and  a  very  little  cunning  might  serve  to  destroy  what  all  the  wisdom  and 
virtue  of  the  nation  could  never  restore." 


Establishment  of  the  Bank — Analysis  of  the  Act.  41 

X\\  these  varied  interests  were  vainly  exerted  to  prevent  the  bill  from 
receiving  the  royal  sanction,  and  the  Bank  of  England,  founded  on  the 
same  principles  which  guided  the  banks  of  Venice  and  Genoa,  was  incor- 
porated by  royal  charter,  dated  the  27th  July,  1604.  From  Mr.  Gil- 
bart's  "  History  and  Principles  of  Banking"  we  present  the  followin^j 
brief  analysis  of  this  important  act :  "  The  act  of  Parliament  by  which 
the  bank  was  established  is  entitled  '  An  Act  for  granting  to  their  maj- 
esties several  duties  upon  tonnage  of  ships  and  vessels,  and  upon  beer, 
ale  and  other  liquors,  for  securing  certain  recompenses  and  advantages  in 
the  said  act  mentioned,  to  such  persons  as  shall  voluntarily  advance  the 
sum  of  fifteen  hundred  thousand  pounds  towards  carrying  on  the  war 
with  France.' "  After  a  variety  of  enactments  relative  to  the  duties 
upon  tonnage  of  ships  and  vessels,  and  upon  beer,  ale  and  other  li- 
quors, the  act  authorizes  the  raising  of  £1,200,000  by  voluntary  sub- 
scription, the  subscribers  to  be  formed  into  a  corporation,  and  be  styled 
"  The  Governor  and  Company  of  the  Bank  of  England."  The  sum  of 
£300,000  was  also  to  be  raised  by  subscription,  and  the  contributors 
to  receive  instead  annuities  for  one,  two  or  three  lives.  Towards 
the  £1,200,000  no  one  person  was  to  subscribe  more  than  £10,000  be- 
fore the  first  day  of  July  next  ensuing,  nor  at  any  time  more  than 
£20,000.  The  corporation  were  to  lend  their  whole  capital  to  govern- 
ment, for  which  they  were  to  receive  interest  at  the  rate  of  eight  per  cent, 
per  annum,  and  £4,000  per  annum  for  management;  being  £100,000  per 
annum  on  the  Avhole.  The  corporation  were  not  allowed  to  borrow  or 
owe  more  than  the  amount  of  their  capital,  and  if  they  did  so,  the  indi- 
vidual members  became  liable  to  the  creditors  in  proportion  to  the 
amount  of  their  stock.  The  corporation  were  not  to  trade  in  any 
"goods,  wares  or  merchandise  whatever,  but  they  were  allowed  to  deal 
in  bills  of  exchange,  gold  or  silver  bullion,  and  to  sell  any  goods,  wares 
or  merchandise  upon  which  they  had  advanced  money,  and  which  had 
not  been  redeemed  w'ithin  three  months  after  the  time  agreed  upon." 
The  whole  of  the  subscription  was  filled  in  a  few  days  ;  twenty-five  per 
cent,  paid  down;  and,  as  we  have  seen,  a  charter  was  issued  on  the  27th 
of  July,  1694,*  of  which  the  following  are  the  most  important  points: 

"  That  the  management  and  government  of  the  corporation  be  commit- 
ted to  the  governor,  deputy-governor,  and  twenty-four  directors,  who 
shall  be  elected  between  the  25th  day  of  March  and  the  26th  day  of 
April  each  year,  from  among  the  members  of  the  company  duly  qualified. 

"  That  no  dividend  shall  at  any  time  be  made  by  the  said  governor  and 
company  save  only  out  of  the  interest,  profit  or  produce  arising  out  of 
the  said  capital  stock  or  fund,  or  by  such  dealing  as  is  allowed  by  act  of 
Parliament. 

"They  must  be  natural  born  subjects  of  England,  or  naturalized  sub- 
jects; they  shall  have  in  their  own  name  and  for  their  own  use,-several]y, 
viz.,  the  governor  at  least  £4,000,  the  deputy-governor  £3,000,  and  each 
director  £2,000,  of  the  capital  stock  of  the  said  corporation. 

*  Passed  April  25th,  1694,  (according  to  Lawson's  History  of  Banking,  p.  40, 
Boston,  1852,)  when  king  Williaji  went  in  state  to  the  House  of  Lords  and  gave  the 
royal  assent  in  the  usual  form. — Am.  Ed. 


42  History  of  the  Bank  of  Enr/land. 

"That  thirteen  or  more  of  the  said  pjovcrnors  or  directors  (of  which 
the  governor  or  deputy-governor  shall  he  always  one)  shall  constitute  a 
court  of  directors  for  the  management  of  the  affairs  of  the  company,  and 
for  the  appointment  of  all  agents  and  servants  which  may  be  necessary, 
paying  them  such  salaries  as  they  may  consider  reasonable. 

"  Every  elector  must  have,  in  his  own  name,  and  for  his  own  use, 
oGSOO,  or  more,  capital  stock,  and  can  only  give  one  vote  ;  he  must,  if  re- 
quired by  any  member  present,  take  the  oath  of  stock,  or  the  declaration 
of  stock,  if  it  be  one  of  those  people  called  Quakers. 

"  Four  general  courts  to  be  held  in  every  year  in  the  months  of  Sep- 
tember, December,  April  and  July.  A  general  court  may  be  summoned 
at  any  time,  upon  the  requisition  of  nine  proprietors  duly  qualified  as 
electors. 

"The  majority  of  electors  in  general  courts  have  the  power  to  make 
and  constitute  by-laws  and  ordinances  for  the  government  of  the  corpo- 
ration, provided  that  such  by-laws  and  ordinances  be  not  repugnant  to  the 
laws  of  the  kingdom,  and  be  confirmed  and  approved  according  to  the 
statutes  in  such  case  made  and  provided." 

When  the  payment  was  completed,  it  was  handed  into  the  exchequer, 
and  the  bank  procured  from  other  quarters  the  funds  which  it  required. 
It  employed  the  same  means  which  the  bankers  had  done  at  the  exchange, 
with  this  diftcrence,  that  the  latter  traded  with  personal  property,  while 
the  bank  traded  with  the  deposits  of  their  customers.  It  was  from  the 
circulation  of  a  capital  so  formed  that  the  bank  derived  their  profit.  It 
is  evident,  however,  from  the  pamphlet  of  the  first  deputy-governor,  that 
at  this  period  they  allowed  interest  to  their  depositors;  and  another 
writer,  D'Avexant,  makes  it  a  subject  of  complaint.  "  It  would  be  for 
•  the  general  good  of  trade  if  the  bank  were  restrained  from  allowing  inter- 
est for  running  cash ;  for  the  ease  of  having  three  and  four  per  cent. 
without  trouble,  must  be  a  continual  bar  to  industry." 

In  Grocers'  Ilall,  since  razed  for  the  erection  of  a  more  stately  struc- 
ture, the 'Bank  of  England  commenced  operations.  Here,  in  one  room, 
with  almost  primitive  simplicity,  w^ere  gathered  all  who  performed  the 
duties  of  the  establishment.  "  I  looked  into  the  great  hall  where  the 
bank  is  kept,"  says  the  graceful  essayist  of  the  day,  "  and  was  not  a  little 
pleased  to  see  the  directors,  secretaries  and  clerks,  with  all  the  other 
members  of  that  wealthy  corporation,  ranged  in  their  several  stations 
according  to  the  parts  they  hold  in  that  just  and  regular  economy."  The 
secretaries  and  clerks  altogether  numbered  but  fifty-four,  while  their 
united  salaries  did  not  exceed  £4,350.  But  the  picture  is  a  pleasant 
one,  and  though  so  much  unlike  present  usages,  it  is  a  doubtful  question 
whether  our  forefathers  did  not  derive  more  benefit  from  intimate  associ- 
ation with  and  kindly  feeling  toward  their  inferiors,  than  their  descend- 
ants receive  from  the  broad  line  of  demarcation  adopted  at  the  present 
day. 

The  effect  of  the  new  corporation  was  almost  immediately  experienced. 
On  the  8th  August,  in  the  year  of  its  establishment,  the  rate  of  discount 
on  foreign  bills  were  six  per  cent. ;  and  although  this  was  the  highest 
legal  interest,  yet  much  higher  rates  had  been  previously  demanded. 
The  name  of  William  Paterson  was  not  long  upon  the  list  of  directors. 


The  Land  Bank.  43 

The  bank  was  established  in  1G94,  and  for  that  year  only  was  its  founder 
among  those  who  managed  its  proceedings.  A  century  and  a  half  has 
passed.  The  facts  which  led  to  his  departure  from  the  honorable  post  of 
director  are  difficult  to  collect ;  but  it  is  not  at  all  improbable  that  thd 
character  of  Paterson  was  too  speculative  for  those  with  whom  he  was 
joined  in  companionship.  Sir  John  Dalrymple  remarks :  "  The  persons 
to  whom  he  applied  made  use  of  his  ideas,  took  the  honor  to  themselves, 
were  civil  to  him  awhile,  and  neglected  him  afterwards."  Another 
writer  says  :  "The  friendless  Scot  was  intrigued  out  of  his  post,  and  out 
of  the  honors  he  had  earned."  These  assertions  must  be  received  witli 
caution  ;  accusations  against  a  great  body  are  easily  made  ;  and  as  it  is 
rarely  consistent  with  the  dignity  of  the  latter  to  reply,  they  are  received 
as  truths  either  because  people  are  too  idle  to  examine,  or  because  there 
is  no  opportunity  of  investigating  them. 

Success  provoked  competition.  A  bank  was  proposed  by  Dr.  Hugh 
Chamberlain  to  advance  money  on  the  security  of  landed  property ; 
and  though  the  Bank  of  England  had  no  occasion  to  fear  rivalry,  they 
petitioned  against  it,  and  ^yere  heard  by  their  counsel.  A  pamphleteer 
of  the  day  says :  "  Estates,  to  a  verj'  great  value,  were  subscribed  in  a 
short  space,  a  deed  settled,  a  company  formed,  and  all  things  disposed  to 
put  this  wonderful  project  into  execution."  All  that  the  projectors  re- 
quired was  money  ;  and  as  that  was  not  ready  at  the  appointed  period, 
"  the  romantic  Land  Bank"  failed.  The  pamphlet  of  Mr.  Michael  God- 
frey oflers  some  particulars  of  the  Bank  of  England,  which  may  account 
for  this  f:iilure.  We  learn  *'  that  the  directors  had  no  fixed  remunera- 
tion, but  submitted  themselves  to  what  the  general  court  chose  to  allow^ 
them  ;  that  such  a  reputation  had  been  given  to  tallies,  they  were  cur- 
rently taken  by  private  persons  at  fifteen  and  twenty  per  cent,  less  dis- 
count than  they  were  previous  to  the  establishment  of  the  bank ;  that  it 
was  the  only  fund  ever  settled  in  England  which  had  lowered  the  interest 
of  money ;  that  though  the  nation  had  been  engaged  in  an  expensive 
war,  though  thirty  millions  had  been  expended  in  it,  and  several  millions 
captured  by  the  enemy,  yet  there  was  a  fall  in  interest  since  the  bank  had 
exerted  itself;  and  previous  to  it  interest  had  been  constantly  rising,  and 
must  have  come  to  a  strange  exorbitancy,  without  the  bank  ;  that  In  the 
short  space  of  thirty  years,  between  two  and  three  millions  had  been  lost 
to  the  people  by  the  goldsmiths  breaking."  With  such  a  list  of  benefits 
conferred  by  one  bank,  the  moneyed  men,  who  believed  the  other  to  be 
impracticable,  were  wise  enough  to  refuse  their  support.  A  paper  war 
was  carried  on  between  the  supporters  of  the  rival  companies,  and  the 
following  extract  will  prove  that,  however  great  the  sarcasm,  it  was  at  least 
surpassed  by  the  ill-nature  of  the  writer.  It  is  entitled,  "  The  trial  and 
condemnation  of  the  Land  Bank  at  Exeter  Change,  for  murdering  the 
Bank  of  England  at  Grocers'  Hall."  A  will,  by  no  means  compliment- 
ary to  the  directors  of  the  latter,  is  supposed  to  be  produced  at  the  trial. 
"  Know  all  our  creditors  by  these  presents,  that  we,  the  governor  and 
company  of  the  Bank  of  England,  being  weak  in  body  through  the 
wounds  received  from  the  Land  Bank  at  Exeter  Change,  to  whom  we  lay 
our  death,  but  of  as  good  sense  as  ever  we  were,  finding  ourselves  im- 
paired in  our  credit  and  reputation,  and  despairing  of  recovery,  do  make 


44  History  of  the  Bank  of  England^ 

our  last  will  and  testament.     Ist.  We  bequeath  our  soul  to  the  devil,  in 
order  to  serve  the  public  out  of  our  creditors'  money;  and  as  to  the 
qualities  of  our  mind,  we  dispose  them  as  follows,  namely,  all  our  skill  in 
foreign  exchanges,  and  our  probity  and  candor  in  making  up  the  accounts 
of  the  loss  thereof,  we  give  to  all  and  every  of  our  directors,  except  four 
or  five,  jointly  and  severally,  to  hold  to  them,  and  to  their  successors,  as 
heir  looms,  and  indelible  monuments  of  their  skill  and  probity  for  ever. 
All  our  obstinacy  and  blunders  we  give  unto  our  present  governor,  upon 
trust,  that  he  shall  employ  one  equal  third  part  thereof  as  one  of  the 
lords  of  the  Admiralty,  and  the  other  part  thereof  as  governor  of  the 
Bank  of  England.     All  our  oaths,  impudence,  &c.,  we  give  unto  our 
present  deputy-governor  and  our  dear  Sir  Henry  Furnebe,  to  hold  in 
joint  partnership  during  their  lives,  and  the  survivor  to  have  the  whole. 
All  our  shuffling  tricks  we  give  to  our  dear  Sir  William  Gore.     All  our 
cynicalness  and  self-conceit  we  give  to  our  directors.  Sir  John  Ward  and 
Sir  Gilbert  Heathcote,  equally  to  be  divided  betwixt  them,  share  and 
share  alike,  as  tenants  in  common.     All  our  blindness  and  fear  we  give 
unto  our  dear  Obadiaii  Sedgwick,  and  we  also  give  him  £6  in  money  to 
buy  him  a  new  cloth  coat,  a  new  half-bcavcr  liat,  a  second-hand  periwig, 
and  an  old  black  sword  to  solicit  with  in  the  lobby,  and  also  to  buy  him 
a  pair  of  spectacles  to  write  letters  to   lords  witb.     As  to  the  residue  of 
our  temporal  estate,  (besides  the   said  £5,)  we  dispose  thereof  as  fol- 
loweth  :     Imprimis,  we  devise  to  our  own  members  (when  they  shall  have 
paid  in  their  whole  £100  per  cent.)  our  fund  of  £100,000  per  annum, 
charged  and  chargeable,  nevertheless,  with  the  sum  of  £1,200,000,  for 
which  it  stands  mortgaged,  by  bank  bills,  in  full  satisfaction  of  all  their 
great  expectations  from  the  probity  and  skill  of  our  directors,  advising 
them  to  accept  a  redemption  thereof  by  Parliament,  whenever  they  can 
have  it.     Item — all  our  ready  moneys,  before  any  of  our  debts  are  paid, 
we  give  to  our  executors,  hereinafter  named,  in  trust,  that  they  shall, 
from  time  to  time,  until  1st  August,  1696,  lend  the  same  into  the  ex- 
chequer, upon  condition  to  defeat  the  establishment  of  the  Land  Bank ; 
and  from  and  after  the  said  1st  August,  then  to  lend  out  the  same  into 
the  said  exchequer,  upon  security  of  premises  to  establish  our  executors 
the  next  session,  instead  of  the  Land  Bank,  and  for  such  other  premiums 
as  our  said  executors  can  give  to  themselves,  for  doing  thereof.     And  we 
do  direct  our  said  executors  to  continue  the  stock  and  pensions  already 
allowed  to  our  past  friends — they  know  where.     And  after  all  our  ready 
moneys  so  disposed,  we  leave  the  residue  of  our  effects  for  payment  of 
bills  and  notes,  at  such  days  and  hours,  and  in  such  manner  and  propor-* 
tion,  and  with  such  preferences,  as  our  said  executors  shall  think  fit.    And 
we  do  hereby  constitute  our  directors  executors  of  this  our  will,  giving 
each  of  them  power,  out  of  our  cash,  to  discount  their  own  tallies,  bills 
and  notes  at  par ;  and  the  bills  and  notes  of  other  of  our  creditors  at  the 
highest  discount  they  can  get  for  the  same.     And  our  body  we  commit 
to  be  burned,  with  all  privacy,  lest  our  creditors  arrest  our  corpse.     In 
witness  whereof,  we  have  hereunto  set  our  common  seal,  4th  May,  1696." 
"  The  epitaph  succeeded  only  in  being  coarse  and  dull ;  and  the  two," 
says  Malcolm,  in  his  "  History  of  London,"  "  may  serve  to  excite  aston* 
ishment  that  an  institution  which  has  baffled  every  art,  foreign  and  do^ 


Difficulties  of  the  Directors.  45 

mestic,  aimed  at  its  ruin,  should  have  attained  such  a  pinnacle  of  splendor 
in  little  more  than  100  years. 

"  Here  lies  the  body  of  the  Bank  of  England,  who  was  born  in  the 
year  1694,  died  May  5th,  1696,  in  the  third  year  of  its  age.  They  had 
issue  legitimate  by  their  common  seal,  1,200,000  called  bank  bills,  and 
by  their  cashier  t\vo  million  sons  of called  Speed'^  notes." 

The  small  extent  of  the  afRiirs  of  the  company  at  the  commencement 
of  its  existence,  compared  with  their  present  magnitude,  appears  from  an 
account  delivered  to  the  House  of  Commons  on  4th  December,  1696,  by 
which  the  balance  in  favor  of  the  bank  amounted  to  £125,315  2s.  By 
an  act  to  regulate  their  proceedings,  the  bank  were  authorized,  from  25th 
March,  1698,  to  pay  their  dividends  half  yearly,  instead  of  quarterly,  as 
they  had  been  accustomed  to  do  up  to  that  period. 

Mr.  Michael  Godfrey,  whose  pamphlet  has  been  quoted,  and  to  whose 
exertions,  with  those  of  William  Paterson,  may  be  traced  the  success- 
ful establishment  of  the  bank,  met  with  a  somewhat  singular  fate  in  1695. 
Previously  to  this  year,  the  allied  armies  had  retreated  before  the  wisdom 
of  Louis,  and  the  bravery  of  his  soldiers.  The  funds  supplied  by  the 
new  corporation  changed  the  scene ;  but  the  transmission  of  specie  was 
difficult  and  full  of  hazard,  and  Mr.  Godfrey  left  his  peaceful  avocations 
to  visit  Namur,  then  vigorously  besieged  by  the  English  monarch.  The 
deputy-governor,  willing  to  flatter  the  king,  anxious  to  forward  his  mis- 
sion, or  possibly  imagining  the  vicinity  of  the  sovereign  to  be  the  safest 
place  he  could  choose,  ventured  into  the  trenches.  "  As  you  are  no  ad- 
venturer in  the  trade  of  war,  Mr.  Godfrey,"  said  William,  "  I  think  you 
should  not  expose  yourself  to  the  hazard  of  it." 

"  Not  being  more  exposed  than  your  majesty,"  was  the  courtly  reply, 
**  should  I  be  excusable  if  I  showed  more  concern  ?" 

"Yes!"  returned  William,  "I  am  in  my  duty,  and  therefore  have  a 
more  reasonable  claim  to  preservation." 

A  cannon-ball  at  this  moment  answered  the  "  reasonable  claim  to  pres- 
ervation," by  killing  Mr.  Godfrey,  with  several  officers  near  the  king ;  and 
it  requires  no  great  stretch  of  imagination  to  fancy  a  saturnine  smile  pass- 
ing over  the  countenance  of  the  monarch,  as  he  beheld  the  fate  of  the  citi- 
zen who  paid  so  heavy  a  penalty  for  playing  the  courtier  in  the  trenches 
of  Namur.  Tradition  states  that  Mr.  Godfrey's  remains,  which  were 
buried  in  the  church-yard  of  St.  Christopher  le  Stocks,  were  disinterred, 
to  make  room  for  the  enlargement  of  that  prosperous  establishment  in 
which  he  once  felt  so  deep  an  interest,  and  in  the  service  of  which  he 
may  be  said  to  have  fallen. 

The  journals  of  the  period  prove  that  the  bank  had  no  pleasant  path  to 
pursue.  The  goldsmiths  were  jealous  of  their  great  competitor.  Their 
business  was  diminished  ;  their  discounts  were  lowered  ;  their  transactions 
with  government  had  passed  to  their  opponents.  The  writer  has  seen 
sufficient  evidence  to  convince  him  of  the  great  difficulties,  arising  out  of 
foreign  feuds  and  internal  division,  experienced  by  the  directors  of  the 
bank  for  the  first  ten  years.  Nothing  but  strong  will,  unconquerable  en- 
ergy, and  a  healthy  perseverance,  could  have  borne  them  on  to  so  trium- 
phant an  issue.  Looking  upon  the  bank  in  its  present  pre-eminent  posi- 
tion, it  is  difficult  to  imagine  it  borne  down  by  jealous  rivalry,  struggling 
4 


46  History  of  the  Bank  of  England. 

for  ii  prc'CJirious  existence  ;  its  notes  at  a  lieavy  discount,  without  specie 
to  meet  tlic  demands  of  its  creditors,  compelled  to  advertise  for  default- 
ers, and  actually  obliged  to  cash  the  notes  payable  on  demand  in  quarter- 
ly instalments.  With  a  government  always  borrowing*  and  always  exi- 
gent, even  they  who  so  zealously  supported  the  interest  of  the  corporation 
must  sometimes  have  shrunk  from  the  responsibility — must  sometimes 
have  feared  for  the  result.  The  plans  adopted  during  the  first  few  years 
were  very  ditierent  to  those  in  use  at  present.  The  great  responsibility 
undertaken  by  the  direction  was  then  unknown.  Courts  of  proprietors 
were  suddenly  called  to  discuss  loans  to  government.  Emergencies 
which  must  arise  in  every  establishment,  were  not  met  by  the  directors, 
but  by  meetings  of  tlie  proprietors.  Novel  positions — and  the  position 
of  the  directors  must  have  been  eminently  novel — were  placed  before  the 
assembled  courts  and  discussed  by  them.  Their  first  and  greatest  diffi- 
culty has  now  to  be  related. 

*  The  leading  events  of  a  commercial  and  financial  character,  preceding  tlie 
charter  of  tlie  Bank  of  England,  were  tlie  following: 

1061 — 1670. — Hearth  money  voted  (1601)  to  Charles  II.  Coffee  introduced  into 
France.  10G2.  Hackney-coaches  first  licensed  in  England.  The  gold  of  Guinea 
freely  coined  into  one,  two  and  five-guinea  pieces.  The  English  first  cut  logwood 
in  Honduras.  Bombay  and  Tangier  ceded  to  England,  and  free  trade  with  Brazil. 
1663.  Tlie  profits  of  the  English  post-office  and  wine  licenses  granted  to  tlie  Duke 
of  York.  The  firsst  saw-mill  in  England  erected.  The  finances,  manufactures,  com- 
merce, marine  and  colonial  systems  of  France  improved  under  Colbert.  1 664.  French 
prohibitory  tariffs  established.  French  East  India  Company  began  to  trade.  1665. 
London  afflicted  by  the  plague,  April  28.  1666.  Great  fire  in  London,  from  Sep- 
tember 2  to  September  6  ;  property  destroyed  vahied  at  £8,000,000.  1667.  A  tax 
of  twelve  pence  levied  on  every  ton  of  coal  brought  into  London,  January  18,  to  aid 
the  rebuilding  of  London.  The  first  stone  of  the  new  Royal  Exchange  laid  (August 
2o)  by  CuARLEs  II.  The  Royal  Observatory,  Paris,  erected.  1669.  Formation  of 
the  Hudson  Bay  Company.  1670.  Shoe-buckles  introduced  into  England,  and 
muslins  introduced  from  India.     Bayonets  invented  at  Bayonne. 

1671 — 1680. — The  money  in  the  Exchequer  (12th  January,  1672)  seized  by 
Charles  II. ;  great  confusion  and  commercial  distress  followed.  1673.  Guineas 
rise  in  value  to  30s.  First  plate-glass  factory  in  England,  at  Lambeth.  1674.  To- 
bacco monopoly  vested  in  the  Crown.  1676.  Calico-printing  and  the  Dutch  loom- 
engine  introduced  into  England.  1677.  The  Dutch  expelled  from  Caj-enne  by  the 
French.  1680.  The  publication  of  newspapers  and  pamphlets  without  a  license 
declared  (May  16)  to  be  illegal  in  England.  First  ship  sent  to  China  by  the  East 
India  Company.  Tea  becoming  known  in  England.  The  slave  trade  flourishing  in 
the  American  colonies  ;  the  English  took  300,000  from  Africa  in  twenty  years. 

1681 — 1690. — A  penny-post  first  established  in  London,  (1683,)  by  a  private  in- 
dividual named  Murray.  1685.  The  Pope  of  Rome,  bj'  comjiulsory  process,  reduced 
the  rates  of  interest  on  the  public  debt  from  four  to  three  per  cent.  Cliinese  ports 
declared  open  to  foreigners.  1686.  Hudson's  Bay  Company's  forts  in  America 
destroyed  by  the  Dutch.  1688.  The  Venetians  made  further  progress  in  Dalmatia. 
Bank  of  Stockliolm  founded. 

1691 — 1700. — -Maritime  trade  of  England  suffers  (1691)  from  French  privateers. 
1692.  Commencement  of  the  English  national  debt.  Poll-tax  authorized  in  England. 
Rice  produced  largely  in  Carolina.  1693.  First  lottery  grant  in  England.  Origin 
of  the  Bank  of  England,  (1694,  25th  April,)  under  William  IIL 


Suspension  of  the  Bank.  47 


CHAPTER     V. 

SUSPENSION    OF    TUK    BANK ITS    NOTES    AT    A   DISCOUNT COM>IENCEMENT    OF    STOCK     JOB- 
BING  EXTENSION     OF     TUE     CUARTER ACCUSATIONS     AGAINST     THE    DIRECTORS THEIR 

DEFENCE ATTEMPT  TO    INJURE  THE   BANK PROPOSALS  FOR  BRANCH  BANKS PROJECTED 

INVASION RUN    UPON   THE    BANK ASSISTANCE    RENDERED. 

The  rash  scheme  of  the  Land  Bank  had  done  some  mischief  to  the 
young  estabUshment ;  the  re-coinage  of  the  silver  did  more.  This  im- 
portant measure  was  supported  by  Mr.  Montague,  who  acted  under  the 
advice  of  Sir  Isaac  Newton  ;  and  although  the  enemies  of  the  expedient 
urged  all  the  reasons  their  imagination  could  suggest,  the  proposition, 
after  long  and  vehement  debates,  was  passed.  The  difficulties  which  al- 
ready environed  the  bank,  partly  from  a  prevalent  feeling  of  discontent, 
and  partly  from  the  ctibrts  of  an  opposition,  which  saw  its  cause  grow 
weaker  in  proportion  as  the  corporation  assisted  the  government,  were 
considerably  increased  by  the  new  measure,  which  prevented  them  from 
meeting  tbeir  engagements  to  pay  their  notes  in  cash.  It  is  probable, 
also,  that  their  funds  were  partially  locked  up  in  advances  on  merchan- 
dise ;  as,  on  the  Cth  May,  1695,  an  advertisement  appeared  in  the  "Lon- 
don Gazette,''''  that  the  "  court  of  directors  of  the  Bank  of  England  give 
notice  they  will  lend  money  on  plate,  lead,  tin,  copper,  steel  and  iron,  at 
four  per  cent,  per  annum."  The  coins  had  been  diminished  by  clipping 
and  filing ;  many  of  the  shillings  contained  only  three  pence  in  silver — - 
an  enormity  attributed  to  the  goldsmiths,  who  appear  to  have  been 
rather  sharp  traders ;  counterfeit  coins  had  also  been  clipped  and  filed. 
that  they  might  pass  the  more  readily.  While  the  coinage  was  proceed- 
ing, money  grew  scarce.  The  bank  was  placed  in  a  peculiar  position. 
They  had  received  the  clipped  money  at  its  full  value ;  they  had  taken 
guineas  at  thirty  shillings,  and  when  the  notes  issued  by  them  in  ex- 
change came  in,  there  was  not  sufficient  specie  to  meet  the  daily  demand. 
Had  they  paid  in  full  they  must  soon  have  been  drained  of  sjiccie,  and 
they  resorted  to  the  plan  of  paying  cash,  at  first  in  instalments  of  ten  per 
cent,  once  a  fortnight,  and  afterwards,  three  per  cent,  once  in  three 
months. 

But  that  this  was  only  a  temporary  pressure,  arising  from  extraordinary 
circumstances  and  not  discredit,  was  proved  from  sealed  bills,  bearing- 
interest,  being  received  by  their  creditors  in  lieu  of  specie.  Bank  notes 
were  advertised  at  twenty  percent,  discount,  but  it  must  be  rememberedi 
that  guineas  were  at  fifty  per  cent,  premium.  The  energy  with  whicii 
the  bank  directors  met  these  difficulties,  and  the  vigor  with  which  they 
were  assisted  by  the  ministry,  prevented  the  evil  from  spreading.  They 
made  two  separate  calls  on  their  shareholders  of  twenty  per  cent,  each, 
and  issued  bills,  bearing  interest  at  the  rate  of  six  per  cent.,  which  they 
gave  in  exchange  for  bank  notes.  That  the  calls  on  their  proprietary 
were  not  responded  to  by  all,  is  proved  by  the  following  advertisement 
on  the  6th  May,  1697,  to  pay  "  the  last  call  of  twenty  per  cent.,  Avhich 


48  History  of  the  Bank  of  England. 

should  have  been  paid  by  10th  November,  1696  :  and  also  those  indebted 
to  the  bank  on  mortgages,  pawns,  notes,  bills  or  other  securities,  to  pay 
in  the  said  twenty  per  cent.,  and  the  principal  and  interest  of  these 
securities  by  1st  June  next."  So  late  as  the  22d  June,  1G97,  we  read  in 
a  well-known  newspaper  of  that  date,  "  Bank  notes  were  yesterday  at 
thirteen  and  fourteen  per  cent,  discount."  The  bank  advertised  also, 
"that  for  the  convenience  of  trade  while  silver  is  re-coining,  such  as 
think  fit  to  keep  an  account  in  a  book  with  the  bank,  may  transfer  any 
sum  under  £5  from  his  own  to  another  man's  account."  This  was  a 
plan  originally  adopted  by  the  Bank  of  Amsterdam,  and  in  all  probability 
copied  from  it.  Exchequer  bills  were  also  issued  for  £5  and  £10  ;  and 
as  they  Avere  received  in  payment  of  the  revenue,  they  passed  as  ready 
money,  and  were  of  great  service  during  the  crisis. 

Exchequer  tallies  had  been  at  forty,  fifty  and  sixty  per  cent,  discount 
in  1696.  The  duties  granted  by  Parliament  frequently  proved  less  than 
the  amount  advanced  on  them.  This  deficiency  was  soon  observed  by 
the  moneyed  men.  They  also  noticed  the  remoteness  of  the  payments 
on  other  advances  ;  that  the  tallies  varied  in  value,  and  a  new  trade  arose 
in  government  securities.  Forty  and  fifty  per  cent,  was  frequently  lost  if 
the  owner  was  compelled  to  part  with  them,  and  the  moneyed  man 
availed  himself  of  his  capital  to  become  the  tally  or  stock-jobber  of  that 
day.  With  the  notes  of  the  national  bank  at  twenty  per  cent,  discount, 
and  public  securities  thirty  per  cent,  worse,  we  must  suppose  the  public 
credit  to  have  been  insecure.  William  III.  was  far  from  popular,  and 
frequent  conspiracies  were  formed  against  his  person  and  his  throne. 
The  Jacobites  were  still  a  numerous  and  important  body.  The  Stuart 
family  were  yet  the  desire  of  many  who  disliked  the  present  monarch. 
If  it  be  added  that  the  expenses  of  the  war  were  greater  than  the  parlia- 
mentary supplies,  no  further  reason  can  be  required  to  account  for  the 
disrepute  into  which  the  credit  of  the  country  had  fallen.  The  evil  called 
loudly  for  a  remedy,  and  the  difliculty  was  boldly  met.  The  government 
empowered  the  corporation  to  add  £1,001,171  10s.  to  their  original 
stock,  and  public  faith  was  restored  by  four-fifths  of  the  subscriptions 
being  received  in  tallies  and  orders,  and  one-fifth  in  bank  notes  at  their 
full  value,  although  both  Avere  at  a  heavy  discount  in  the  market. 

The  past  services  of  the  bank  were  not  forgotten.  The  ministry  re- 
solved that  it  should  be  enlarged  by  new  subscriptions  ;  that  provision 
should  be  made  for  paying  the  principal  of  the  tallies  subscribed  in  the 
bank ;  that  eight  per  cent,  should  be  allowed  on  all  such  tallies,  to  meet 
which,  a  duty  on  salt  was  imposed ;  that  the  charter  should  be  prolonged 
to  August,  1710  ;  that  before  the  beginning  of  the  new  subscriptions  the 
old  capital  should  be  made  up  to  each  member  one  hundred  per  cent., 
and  what  might  exceed  that  value  should  be  divided  among  the  new 
members ;  that  the  bank  might  circulate  additional  notes  to  the  amount 
•subscribed,  provided  they  were  payable  on  demand  ;  and  in  default,  they 
were  to  be  paid  by  the  exchequer  out  of  the  first  money  due  to  the  bank; 
that  no  other  bank  should  be  allowed,  by  act  of  Parliament,  during  the 
continuance  of  the  Bank  of  England  ;  that  it  should  be  exempt  from  all 
tax  or  imposition  ;  that  no  contract  made  for  any  bank  stock  to  be  bought 
or  sold  should  be  valid,  unless  registered  iu  the  bank  books,  and  trans- 


Accusations  against  the  Directors.  49 

ferred  within  fourteen  days.  It  was  also  enacted,  that  not  above  two- 
thirds  of  the  directors  of  the  preceding  year  should  be  re-elected  in  the 
succeeding  year. 

Tiiese  vigorous  measures  were  thoroughly  successful.  "  The  nation," 
says  Smollett,  "  did  not  know  its  own  strength  till  it  was  put  to  trial." 
The  corporation,  also,  were  not  to  owe  more  than  the  total  amount  of  all 
their  increased  capital.  With  these  arrangements,  the  charter  was  extend- 
ed until  1710,  nor  could  it  then  be  taken  away  until  government  paid 
the  debt  owing  by  them  to  the  bank.  By  this  act,  the  forgery  of  the 
company's  seal,  notes  or  bills,  was  made  felony  without  benefit  of  clergy. 
Great  gains  were  made ;  great  fortunes  even  were  won  by  the  capitalists 
of  the  day.  Sir  Gilbert  IIeatucdte,  one  of  the  bank  directors,  gained 
£60,000  by  the  liberal  scheme  ;  and  numerous  estates  were  raised  in  a 
shorter  time  than  was  ever  known. 

A  pamphleteer  of  the  period  states  that  the  bank  oftered  to  lend  a  mil- 
lion without  interest,  for  twenty-one  years,  if  government  would  extend 
the  charter  to  the  same  period.  The  writer  good-naturedly  adds,  "  As 
the  bank  discount  at  four  per  cent,,  the  directors  will  have  more  command 
to  this  favor,  and  beyond  others.  They,  therefore,  or  any  of  them,  being 
merchants,  easily  foreseeing  the  great  advantages  by  monopolizing  several 
commodities,  will  be  able  to  provide  themselves,  and  thus  monopolies 
may  be  spread."  Time  has  pronounced  this  to  be  an  unworthy  objection. 
It  may,  as  a  principle,  be  confidently  asserted,  that,  up  to  the  present 
time,  no  accommodation  has  been  afforded  to  a  director  by  virtue  solely  of 
his  office,  which  would  not  have  been  awarded  him  as  a  merchant  of  the 
city  of  London.  Another  writer,  in  "  A  letter  concerning  the  bank  and 
the  credit  of  the  nation,"  says,  "  The  directors,  upon  a  pressing  occasion 
of  the  king's,  had  stretched  their  credit  to  a  degree  that  could  not  con- 
sist with  any  measure  of  prudence,  nor  could  the  directors  answer  it  to 
their  members,  had  it  been  for  any  less  occasion  than  the  preservation  of 
the  kingdom."  The  reason  given  is  sufficient  excuse  for  the  offence. 
The  "  preservation  of  the  kingdom"  was  the  preservation  of  the  Bank  of 
England.  But  the  most  triumphant  answer  which  could  be  given  to  all 
these  attacks  was  the  remarkable  fact,  that  bank  stocks,  given  to  the  pro- 
prietors in  exchange  for  tallies  at  fifty  per  cent,  discount,  rose  to  one  hun- 
dred and  twelve  per  cent.  There  is  no  reply  to  a  fallacy  so  triumphant 
as  a  fact,  no  rejoinder  to  a  sparkling  sophism  so  unanswerable  as  a  plain 
truth.  Nothing  can  mark  more  strongly  the  triumph  of  this  corporation 
over  its  enemies,  nothing  can  more  plainly  evince  that  it  was  founded  on 
safe  principles,  than  that  bank  stock  maintained  so  great  a  value.  In  ad- 
dition to  these  things,  it  must  be  remembered  that  money,  which  ten 
years  before  had  borne  so  high  a  rate  of  interest,  was  sufficiently  plentiful 
to  realize  the  prophecies  contained  in  the  pamphlet  of  Mr.  Michael  God- 
frey. "  The  bank  will  infallibly  lower  the  interest  of  money."  "  And 
now  the  bank  is  established,  all  who  want  money  and  have  security  will 
know  where  to  be  supplied,  and  the  terms  ;  and  there  cannot  be  such 
advantages  made  in  the  public  or  private  men's  necessities  for  the  fu- 
ture." The  truth  of  these  remarks  is  to  be  found  in  the  fact,  that,  on  the 
16tli  of  January,  1695,  foreign  bills,  having  three  months  to  run,  were  dis- 
counted at  six  per  cent. ;  and  to  those  who  kept  accounts  at  the  bank 


50  History  of  the  BanTc  of  England. 

only  three  per  cent,  was  charged  ;  tliat  on  the  19th  uf  May  running  notes 
and  bills  were  discounted  at  three  per  cent.,  and  tliat  money  was  ad- 
vanced on  merchandise  at  four  per  cent. 

So  early  as  1697,  in  "Some  thoughts  of  the  interest  of  England,"  a 
proposal  was  made  "  that  the  Bank  of  England  be  branched  into  every 
city  and  market-town  in  England,  and  that  the  several  branches  be  ac- 
countable to  the  general  bank  in  London  for  the  profits  of  their  respect- 
ive branches."  Had  this  plan  been  carried  into  effect,  some  of  those 
crises  which  have  borne  ruin  into  many  happy  homes  would  have  been 
averted.  The  entire  circulation  would  have  been  in  the  hands  of  an  es- 
tablishment equal  in  stability  to  the  government.  The  "  London  Ga- 
zette''' would  not  have  borne  testimony  to  the  ill-fortune  or  faithlessness 
of  many  firms  with  Avhich  the  profits  of  a  life  were  placed.  The  prov- 
inces would  not  have  rung  with  the  desolation  which  penetrated  to  the 
hearth  and  heart  of  the  English  peasantry.  The  cottager,  who  had  hoard- 
ed his  gains,  earned  by  the  waste  of  sinew  and  of  strength,  would  not 
have  been  crushed  by  the  intelligence  that  the  banker  of  his  district  had 
failed  in  his  great  trust.  The  father,  who  left  his  home  with  alight  heart, 
would  not  have  returned  with  news  whicli  he  dreaded  to  communicate. 
Tlie  grandsire  and  the  infant,  the  widow  and  the  fatherless,  the  maiden 
and  the  matron,  would  have  been  saved  the  stony  bread  of  charity ;  nor 
would  society  have  been  startled  by  so  many  disgraceful  monetary  fail- 
ures, had  the  Bank  of  England  possessed  the  entire  management  of  that 
circulation  which,  as  a  responsible  body,  should  have  been  placed  under 
its  control.  At  a  later  period  Mr.  Horner  stated,  in  the  House  of  Com- 
mons, that  the  destruction  of  country  bank  paper  had  given  rise  to  a  uni- 
versality of  wretchedness  only  to  be  equalled  by  the  bursting  of  the  Mis- 
sissippi bubble.  "  Thousands  upon  thousands  found  themselves  sunk,  as 
if  by  enchantment,  and  without  any  fault  of  their  own,  in  the  abyss  of 
poverty."  Next  to  a  government,  with  which,  from  various  reasons,  it 
would  be  most  unwise  to  place  it,  the  greatest  bank  of  the  empire  has  an 
indisputable  claim  to  the  circulation  of  the  country. 

By  the  various  extracts  given  above,  it  may  be  seen  that  the  directors 
did  not  repose  upon  a  bed  of  roses.  Constantly  invited  to  aid  a  needy 
government,  and  as  constantly  abused  and  upbraided  by  those  inimical  to 
it,  they  had  but  one  path — the  path  of  probity  and  rectitude — to  pursue ; 
and  by  it  they  attained  a  triumphant  success.  During  their  early  career, 
the  violence  with  which  they  were  assailed  by  their  opponents  stimulated 
their  efforts.  It  is  probable,  and  the  course  of  nature  justifies  the  suppo- 
sition, that  had  they  been  unopposed,  they  would  have  failed  in  attaining 
equal  importance.  Uninterrupted  prosperity  produces  presumption,  and 
presumption  is  often  the  precursor  of  failure.  An  arrogant  confidence  in 
their  good  fortune,  therefore,  might  have  produced  the  practical  convic- 
tion that  they  Avere  fallible  to  the  precise  extent  they  considered  them- 
selves infallible.  Opposition,  however,  induced  caution,  stimulated  their 
energies,  and  produced  an  eminent  and  honorable  success. 

The  ambitious  spirit  of  France  was  signally  displayed  in  IVOO,  to  the 
injury  of  the  credit  of  the  nation.  The  alarm  of  all  Europe,  indeed,  was 
excited  by  Louis,  who,  under  the  pretence  of  a  will  in  favor  of  his  grand- 
son, seized  upon  the  entire  Spanish  monarchy.     By  the  possession  of  the 


Projected  Invasion.  51 

imperial  fiefs  in  Italy,  the  empire  was  concerned.  By  his  grasp  on  the 
Spanish  Netherlands,  the  Dutch  were  deprived  of  their  barrier  against 
his  ambition.  By  his  hold  on  Spain,  the  great  Mediterranean  commerce 
rested  at  his  mercy.  Terror  spread  throughout  the  land ;  the  public 
funds  were  affected,  and  the  credit  of  the  Bank  of  England,  which  has 
always  paid  a  heavy  penalty  in  times  of  national  fear,  for  its  connection 
with  government,  was  shaken  with  the  general  apprehension.  The  same 
effect  was  produced  in  1704,  and  the  prices  of  public  securities  were 
again  lowered.  From  an  insurrection  in  Hungary,  and  the  invasion  of 
the  German  empire  by  the  French,  great  evils  were  apprehended,  which 
so  much  affected  the  public  faith  that  the  bank  directors  were  once  more 
obliged  to  issue  sealed  bills,  bearing  interest,  for  a  large  sum,  in  order  to 
keep  up  their  credit.  The  scene,  however,  soon  changed.  Blenheim 
witnessed  our  superiority ;  the  proud  fortress  of  Gibraltar  yielded  before 
British  prowess  ;  and  the  public  credit  of  the  country  arose  with  her  vic- 
tories. The  sealed  bills  enabled  the  bank  to  bear  up  until  happier  times, 
when  its  character  was  restored,  and  its  usefulness  once  more  experienced 
by  the  community. 

In  the  year  1707,  one  of  those  invasions  which  were  periodically 
threatened  by  the  Pretender  excited  the  accustomed  alarm.  The  expe- 
dition was  assisted  by  Louis  XIV.,  and  great  splendor  was  affected  in 
the  appointments.  The  head  of  the  holy  Catholic  faith  subscribed  to- 
wards the  expedition.  Sumptuous  tents,  rich  tapestries  and  splendid 
liveries  gave  it  the  appearance  of  a  triumph  for  a  kingdom  won,  rather 
than  a  trial  to  regain  an  empire  lost.  Religious  mottoes  were  wrought 
upon  the  standards,  which  looked  more  like  the  colors  of  a  crusade  than 
those  of  a  political  enterprise.  Louis,  with  a  grace  that  distinguished 
him,  and  with  a  compliment  worthy  his  finished  grace,  "  trusted  he 
should  never  see  the  royal  adventurer  again."  Alarm  spread  throughout 
the  country.  It  is  difficult  to  say  whether,  at  the  period,  the  Pope,  the 
devil  or  the  Pretender,  was  feared  the  most.  The  probability  of  an  in- 
vasion by  the  chevalier  startled  the  people,  and  a  demand  was  immedi- 
ately and  extensively  made  for  gold  by  the  excited  populace.  "The  late 
hurry  of  an  expected  invasion,"  says  a  pamphlet,  entitled  "  The  Anatomy 
of  Exchange  Alley,"  "  sunk  the  price  of  stocks  fourteen  or  fifteen  per 
cent.  Who  were  the  men  that  made  a  run  upon  the  Bank  of  England, 
and  pushed  at  them  with  some  particular  pique,  too,  if  possible  to  have 
run  them  down,  and  brought  them  to  a  stop  of  payment?  Is  not  this 
disabling  the  government,  discouraging  the  king's  friends,  and  a  visible 
encouragement  of  the  king's  enemies?"  The  feelings  of  the  private 
bankers  towards  their  great  rival  do  not  appear  to  have  been  very  con- 
ciliatory. The  same  writer  says,  "  I  humbly  refer  to  a  case  recent  in 
memory,  of  two  goldsmiths,  (knights  also,  and  one  of  them  member  of 
Parliament,  too,)  in  Fleet-street,  who  pushed  at  the  Bank  of  England  at 
the  time  of  the  Pretender's  invasion  from  France.  One  of  them,  it  was 
?aid,  had  gathered  a  quantity  of  bank  bills  to  the  value  of  near  £100,000, 
and  the  other  a  great  sum,  though  not  so  many,  and,  it  was  said,  resolved 
to  demand  them  all  at  once.  Let  the  gentlemen  I  point  at  inquire  with 
what  difficulty  Sir  R.  Hoake  wiped  off  the  imputation  of  being  a  favorer 
of  the  rebellion,  and  how  often  in  vain  he  protested  he  diil  it  with  no 


52  History  of  the  Bank  of  England. 

such  view,  and  how  hard  the  whigs  were  to  believe  him.  Sir  Francis 
Child,  indeed,  carried  it  with  a  higher  hand,  and  afterwards  pretended 
to  refuse  the  bills  of  the  bank,  but  still  declared  he  did  it  as  a  goldsmith, 
and  as  a  piece  of  justice  to  himself,  on  some  points  in  which  the  bank 
had,  as  he  alleged,  used  him  ill."  The  proposed  invasion  proved  the 
esteem  with  which  the  bank*  was  regarded  by  those  whose  good  opinion 
was  worth  possessing.  It  was  found  that  the  Protestant  succession  had 
supporters  as  ardent  as  the  adherents  to  the  house  of  Stuart.  When 
the  run  took  place,  many,  instead  of  withdrawing  their  deposits,  carried 
all  their  cash  to  assist  the  establishment.  The  Lord  Treasurer,  Godol- 
PHiN,  who,  as  an  astute  and  able  financier,  felt  that  the  credit  of  the 
country  was  connected  with  that  of  the  bank,  informed  the  directors  that 
the  queen  would  allow,  for  six  months,  an  interest  of  six  per  cent,  on 
their  sealed  bills.  Nor  was  this  all ;  the  Dukes  of  Marlborough,  New- 
castle and  Somerset,  with  others  of  the  nobility,  offered  to  advance  con- 
siderable sums  of  money  to  the  corporation.  A  private  individual,  who 
had  but  £500,  carried  it  to  the  bank;  and  on  the  story  being  told  to  the 
queen,  she  sent  him  £100,  with  an  obligation  on  the  Treasury  to  repay 
the  whole  £500.  It  is  pleasant  to  read  of  such  chivalrous  devotion  re- 
paid in  so  royal  a  manner.  Encouragement  such  as  this  gave  a  firmness 
to  the  establishment,  and,  united  with  a  call  of  twenty  per  cent,  on  the 
proprietors,  enabled  the  directors  to  meet  their  difficulties  and  preserve 
their  credit. 

*  The  progress  of  geographical  knowledge  rapidly  increased  throughout  Europe 
during  the  eighteenth  century ;  and  important  projects  were  entertained,  with  a 
view  to  settle  remote  colonies,  and  thus  extend  the  commerce  with  other  nations. 
The  Darien  expedition,  under  William  Pateeson,  had  left  Scotland  in  the  year  1698. 
This  gave  rise  to  the  South  Sea  Company  in  1710 — 1712,  and  further  gave  rise  to 
many  of  the  monopolies  granted  early  in  the  century.  The  Dutch,  the  Swedes  and 
the  Danes  all  strove  to  extend  their  commerce  in  the  East  Indies ;  and  vigorous 
efforts  were  made  by  the  French  and  the  English  to  attain  the  ascendancy  in  the 
West  Indies.  Anson,  Vancouver  and  Cook  made  their  noted  voyages  of  discovery. 
The  century  was  further  distinguished  for  the  introduction  of  cotton  from  Jamaica 
and  other  West  India  islands  into  Europe,  and  its  conversion  into  wearing  apparel, 
as  a  substitute  for  the  use  of  woollen  and  linen  goods.  Before  the  collision  between 
England  and  her  colonies,  Arkwright  had  made  known  his  important  improvement 
in  cotton-spinning ;  and,  soon  after,  the  more  important  invention  of  Whitney 
accomplislied  for  the  American  planter  the  great  labor-saving  machine  known  as 
the  cotton  gin. 

1701 — 1710. — A  "Council  of  Trade"  suggested  by  William  Paterson.  In  1702 
an  income  tax  and  other  taxes  levied  in  England.  Manufactures  were  established 
in  Russia  and  Denmark.  1704.  The  Boston  News  Letter  published — the  first  news- 
paper in  tlie  American  colonies.  1706.  Porcelain  was  first  made  at  Dresden.  Ex- 
chequer bills,  this  year,  were  first  circulated  by  the  Bank  of  England.  1707.  Great 
financial  distress  prevailed  in  France.  Paper  money  issued  and  sold  at  53  per  cent, 
discount.  1708.  Bank  of  England  charter  renewed,  and  again  in  1713.  1709.  Copy- 
right act  in  England,  8  Anne.     1710.  The  South  Sea  Company  originated,  6th  May. 


Review  of  the  Bank.  53 


CHAPTER     VI. 

PRIVILEGES     OK     THE     BANK    RENEWED     AND    EXTENDED DISGRACEFUL     TRANSACTIONS     OK 

THE     MINE     adventurers'     COMPANY BANK     CAPITAL     INCREASED TUE    SACHEVERELL 

RIOTS    AND    PROPOSED    ATTACK    ON    THE    BANK IMPORTANCE    OF    THE    BANK RUN    UPON 

THE    BANK RENEWAL  OF  THE  CHARTER REDUCTION    OF   INTEREST FIRST    SUECRIPTION 

TO    GOVERNMENT    LOANS. 

Prior  to  1708,  the  government  had  paid  off  the  principal  and  interest 
of  the  additional  debt  incurred  in  \QQl  ;  by  this,  the  capital  of  the  bank 
was  reduced  to  its  original  amount,  and  in  the  first-named  year  the  ex- 
tension of  the  charter  was  again  proposed  till  1732.  The  same  plans  of 
passive  and  active  resistance  which  had  hitherto  been  pursued  by  the 
opponents  of  the  bank — an  opposition  renewed  whenever  the  opportunity 
has  offered — were  again  resorted  to  with  great  energy.  Pamphlets  bearing 
such  titles  as  "  Remarks  upon  the  Bank  of  England  ;"  "  A  Short  View  of 
the  Apparent  Danger  and  Mischief  from  the  Bank  of  England;"  "Rea- 
sons Against  the  Continuance  of  the  Bank  of  England ;"  poured  from 
the  press  with  a  vehemence  that  must  have  proved  dangerous  to  the 
young  establishment,  had  it  not  been  based  upon  a  firmer  foundation 
than  the  breath  of  popular  opinion.  An  answer  was  written  by  Na- 
thaniel Tench,  whose  name  forms  one  of  the  earliest  directors.  Stow 
says,  "The  chief  purpose  of  this  defence  was  to  vindicate  the  corporation 
and  the  management  thereof.  Not  so  much  from  the  crimes  they  had 
already  been  guilty  of  in  the  experiment  of  eleven  or  twelve  years,  as  the 
fear  of  what  they  might  do  hereafter." 

This  pamphlet  contained  a  very  able  defence  of  the  directors,  and  an 
enumeration  of  their  services,  of  which  the  following  is  the  conclusion, 
tending  to  prove  that  there  were  in  this,  as  in  most  cases,  two  sides  to 
the  question  :  "  It  might  be,  with  truth,  concluded  that,  since  their  first 
establishment,  they  never  bought  one  foot  of  land  ;  they  never  monopo- 
lized any  one  commodity ;  that  they  had  been  so  far  from  obstructing 
trade  that  they  had  very  much  encouraged  and  enlarged  it.  That  they 
had  never  put  any  hardships  upon  the  government,  as  those  authors 
would  insinuate,  but  had  at  all  times  served  it  to  the  utmost  of  their 
power.  That  they  had  been  so  far  from  raising  the  interest  of  money, 
that  they  were  the  great,  if  not  the  only  cause,  of  lowering  it.  That 
they  had  never  concerned  themselves  in  the  election  of  any  one  member 
of  Parliament,  nor  never  advanced  a  single  penny  to  influence  any  elec- 
tion. Neither  could  any  man  complain  that  he  did  not  receive  his  money 
on  demand  that  called  for  it.  In  short,  that  notwithstanding  the  clamor 
and  noise  their  adversaries  made  against  them,  they  had  not  brought 
any  instance  that  they  had  been  guilty  of  any  base  or  unworthy  action, 
in  anyone  fact  committed  by  them  since  their  first  establishment ;  so 
that  all  the  clamor  of  their  ill-willers  had  been  raised  upon  a  bare  suspi- 
cion of  what  their  successors  might  do  hereafter."  It  is  satisfactory  to 
read  such  a  succession  of  services  emanating  from  an  establishment  not 
fourteen  years  of  age,  penned  also  by  one  who  could  well  appreciate  the 


54  History  of  the  Bank  of  England. 

troubles  of  bis  brotber  directors.  Tbere  was  anotbcr  cbampion  in  tbe 
field,  who  publisbed  "Reasons  for  cncoiinigiiig  tbe  Bank  of  P^ngland." 
"  The  bank,"  remarks  the  writer,  "  has  been  the  sole  cause  of  lowering 
the  interest  of  money,  whicb  is  the  only  fund  that  ever  lowered  it — and 
that,  too,  in  time  of  Avar,  when  interest  usually  rises — by  whicb  the  nation, 
since  tbe  bank  was  erected,  has  saved  a  great  sum  of  money,  having  been 
supplied  at  a  mucli  cheaper  rate  than  formerly,  which  doth  excite  indus- 
try, raise  tbe  value  of  land  and  increase  trade." 

Tbe  eminent  services  of  tbe  Bank  of  England  to  the  political  and  com- 
mercial community,  tbe  integrity  with  which  it  had  ever  been  conducted, 
and  tbe  aid  rendered  to  government,  the  importance  of  which  it  had  as- 
sisted to  maintain,  were  now  to  be  acknowledged  and  rewarded.  Its 
"  important  banking  privileges,"  as  Mr,  Fenn,  in  his  "  English  and  For- 
eign Funds,"  truly  terms  them,  were  conveyed  in  return  for  these.  By 
the  act  of  1*708  their  charter  was  extended  until  1*732,  and  it  was  therein 
provided,  "  That,  during  the  continuance  of  the  said  corporation  of  the 
governor  and  company  of  tbe  Bank  of  England,  it  shall  not  be  lawful  for 
any  body  politic  or  corporate  whatsoever  created,  or  to  be  created,  other 
than  the  said  governor  and  company,  or  for  any  other  persons  whatever, 
united  or  to  be  united  in  covenant  or  partnership  exceeding  tbe  number 
of  six  persons  in  England,  to  borrow,  owe,  or  take  up  any  sum  or  sums 
of  money  on  their  bills  or  notes,  payable  on  demand,  or  at  a  less  time 
than  six  months  from  the  borrowing  thereof." 

A  circumstance  which  appeared  to  threaten  tbe  prosperity  of  the  bank 
tended  to  produce  the  above  favorable  clause.  The  "  Company  of  Mine 
Adventurers,"  at  tbe  bead  of  which  were  peers  and  baronets,  but  which, 
nevertheless,  proved  a  most  melancholy  bubble,  arrogated  many  preroga- 
tives belonging  to  the  corporation.  They  erected  themselves  into  a  money 
bank,  issued  cash  notes,  and  circulated  sealed  bills,  until  restrained  by 
tbe  above  act.  The  hopes  of  the  proprietors  had  been  stimulated  by  Sir 
Humphrey  Mackworth,  tbe  projector,  who  carried  on  his  chicanery  with 
an  ability  worthy  a  better  cause.  He  imposed  upon  tbe  proprietors  for 
five  years  by  "  false  and  sham  calculations  of  their  profits — by  purchasing 
lead  from  other  persons'  mines  and  declaring  it  to  be  digged  from  the 
company's  mines,  and  by  buying  silver  extracted  from  other  men's  lead 
and  getting  it  coined  in  the  king's  mint,  as  coming  from  the  company's 
mines."  So  disbonoi'able  a  course  could  not  be  pursued  without  discov- 
ery, and  the  scheme  met  Avith  the  fate  it  merited.  Like  the  South  Sea 
Company  at  a  later  period,  it  was  pronounced  a  bubble  by  the  House  of 
Commons,  who  voted  that  Sir  Humphrey  Mackworth  Avas  guilty  of 
"  scandalous  frauds,"  and  brought  in  a  bill  to  prevent  the  secretary  and 
treasurer  from  leaving  the  kingdom.  The  bill,  boAvever,  did  not  pass  the 
House  of  Lords,  for  Sir  Humphrey  Avas  a  high  Tory,  and  the  Tories  Avere 
in  power. 

Another  object  avus  gained  by  tbe  government  in  the  above  charter. 
They  Avere  desirous  of  circulating  exchequer  bills  on  the  security  of  the 
house  duties,  and  tbe  bank  undertook  to  cancel  £1,500,000  at  six  per  cent, 
interest  until  redemption  of  tbe  principal,  in  consideration  of  the  privi- 
leges granted  them  ;  this,  Avith  interest,  amounted  to  £1,775,027  l7s.  lO^d. 
The   measure   procured    the   favor    of   the   government,  as   it   tended 


Neio  Subscription  of  1*708 — Sacheverell  Riots.  55 

to  relieve  the  ministers  from  difficulty.  It  was  the  first  time  that  the 
bank  had  undertaken  the  circulation  of  exchequer  bills,  and  they  again 
issued  sealed  bills  at  an  interest  of  2d.  per  cent,  per  diem.  These  transac- 
tions rendered  a  new  subscription  of  £1,001,171  10s.,  and  another  of 
£2,201,171  10s.  necessary,  which,  with  a  call  on  the  proprietors  of  fif- 
teen per  cent., amounting  to  £656,204  Is.  9d.,  increased  the  total  capital 
to  £5,058,547  Is.  9d.  Anderson  gives  some  curious  particulars:  "The 
bank,"  he  says,  "  continued  to  permit  new  subscriptions  for  the  doubling 
their  present  stock,  by  selling  the  additional  stock  at  the  rate  of  £115  for 
every  £100  subscribed.  All  which  was  subscribed  for  between  the  hours 
of  nine  in  the  morning  and  one  in  the  afternoon.  Nearly  one  million 
more  could  have  been  subscribed  on  the  same  day,  so  great  was  the 
crowd  of  people  coming  with  their  money  to  the  books." 

The  bank  obliged  themselves  to  advance  to  government  £400,000  with- 
out interest,  which  made  their  original  capital  of  £1,200,000  at  eight  per 
cent,  amount  to  £1,600,000  at  six  per  cent.,  to  commence  from  1st  Au- 
gust, 1711.  Discount  being  allowed  on  the  said  £400,000  till  the  1st 
Angust,  l7ll,  and  the  fifteen  per  cent,  advance  on  the  sale  of  their  addi- 
tional stock  enabled  them  to  pay  this  £400,000  to  the  public. 

In  1709  a  new  danger  arose  to  the  Bank  of  England.  The  importance 
of  the  corporation,  and  the  great  wealth  possessed  in  its  treasury,  have 
always  rendered  it  liable  to  attack  in  times  of  political  excitement. 
Large  bodies,  collected  in  haste,  and  agitated  with  passion,  are  rarely  dis- 
criminatory. There  are  always  a  number  of  idle  and  profligate  men  to 
whom  the  very  name  of  the  bank  possesses  a  charm  ;  and  up  to  the  pres- 
ent day  it  has  been  periodically  liable  to  attacks  from  the  mobocracy. 
In  the  present  case  the  piety  of  the  people  created  a  religious  riot.  One 
Dr.  Henry  Sacheverell,  an  apostate  Whig,  was  appointed  to  preach 
the  annual  sermon  at  St.  Paul's,  before  the  Lord  Mayor  and  court  of  al- 
dermen. An  apostate  is  usually  violent  in  proportion  to  his  apostacy, 
and  Dr.  Henry  Sacheverell  was  no  exception  to  the  rule.  The  sermon 
was  nsed  as  an  engine  of  attack  upon  some  of  the  members  of  her  majes- 
ty's government.  Among  others,  the  Lord  Treasurer  was  characterized  as 
Volpone.  The  measureless  impudence  of  the  preacher  attracted  attention, 
and  Sir  Gilbert  Heathcote,  a  director  of  the  Bank  of  England,  and  a 
wise  man  in  his  generation — for  we  have  seen  he  made  sixty  thousand 
pounds  by  one  transaction — protested  against  it ;  nor  did  the  city  author- 
ities make  the  ordinary  request  to  have  it  published. 

But,  as  publicity  was  the  worthy  doctor's  object,  and  the  truth  of  no 
importance,  he  pretended  that  Garrard,  the  Lord  Mayor,  had  desired 
him  to  print  it,  and  to  him  he  dedicated  it,  with  an  inflammatory  epistle. 
Impudence  is  generally  successful  for  a  time,  and  the  doctor  attracted  at- 
tention. He  was  arrested  and  impeached,  in  revenge  for  the  liberties  he 
had  taken  with  government.  "  I  know,"  says  Lord  Dartmouth,  "  neither 
the  doctor  nor  the  doctrine  had  been  called  in  question,  if  the  word  Vol- 
pone had  been  left  out  of  the  sermon."  The  populace — skilful  judges  of 
a  sermon — chose  to  support  the  divine,  and  London  became  a  scene  of 
confusion.  To  the  lower  class  the  prospect  of  a  riot  is  generally  pleas- 
ant ;  and,  if  they  can  flatter  themselves  that  it  is  for  the  cause  of  religion, 
they  are  doubly  riotous.     They  now  determined  to  support  the  worthy 


56  History  of  the  Bank  of  England. 

doctor ;  and  a  body-guard  of  London  butchers  accompanied  him  to  his 
trial  at  Westminster  Ilall,  which  the  queen  honored  with  her  presence, 
"  God  bless  the  Church  and  Dr.  Saciieverell"  was  echoed  from  mouth 
to  mouth  among  the  pious  populace.  Multitudes  followed,  pressing  about 
him,  and  striving  to  kiss  his  hand.  Money  was  thrown  among  them,  by 
some  of  the  better  classes,  Avho  followed  in  hackney  coaches.  The  anxie- 
ty of  the  bank  directors  during  this  period  of  tumult  must  have  been  great, 
as  every  day  rendered  them  liable  to  attack.  The  divine,  inflated  with 
his  popularity,  looked  upon  himself  as  half  hero  and  half  martyr.  The 
people  sought  the  dissenting  chapels,  collected  the  liymn-books  and  bi- 
bles, broke  up  the  pews  and  tore  down  the  pulpits,  and  made  a  great  bon- 
fire in  Lincoln's  Inn  Fields.  There  was  one  trifling  error  in  destroying 
a  church  for  a  chapel,  owing  to  its  wanting  a  steeple  ;  but  the  populace 
are  not  nice  discriminators.  Bishop  Burnet  only  escaped  by  the  bold 
and  determined  courage  of  some  of  the  more  respectable  inhabitants,  and 
their  great  ambition  was  to  place  a  dissenting  minister  on  the  top  of  one 
of  the  piles  ;  but  in  this  they  were  disappointed. 

The  queen  and  court  were  in  the  utmost  consternation.  The  citizens 
were  in  equal  alarm.  Intelligence  reached  the  bank  directors  that  the 
rioters  were  moving  towards  their  locality.  As  a  pious  mob  was  no 
more  to  be  trusted  than  a  political  one,  the  court  assembled  to  "  con- 
cert measures  proper  to  be  taken,  and  sent  to  the  principal  Secretary  of 
State  for  a  guard  to  prevent  any  attempt  they  might  make  on  the  bank." 
When  the  message  was  received,  the  Earl  of  Sunderland  made  its  tenor 
known  to  the  queen,  who  immediately  ordered  both  horse  and  foot  out 
to  quell  the  tumult,  leaving  her  own  person  without  any  protection. 
''  God  will  be  my  guard,"  was  her  regal  reply,  when  reminded  of  her 
danger,  A  detachment  under  Captain  Horsey  was  immediately  ordered 
into  the  city  to  prevent  the  meditated  attack  on  the  alarmed  directors. 
"  Am  I  to  preach  or  fight  V  was  the  question  of  the  blunt  soldier,  on  re- 
ceiving his  instructions.  There  proved  to  be  no  occasion  for  either. 
The  rioters  retreated  in  alarm  ;  the  bank  was  saved  from  pillage,  by  the 
self-sacrifice  and  devotion  of  the  queen;  and  the  affair,  which  was  a  trial 
of  party  strength,  terminated  without  difficulty. 

Much  inconvenience  having  been  experienced  from  directors  of  the 
East  India  Company  being  also  in  the  direction  of  the  bank,  it  was  de- 
creed by  a  clause  in  the  9th  act  of  Queen  Anne,  1712,  that  no  person 
should  be  governor,  deputy-governor  or  director  of  the  Bank  of  England 
and  the  East  India  Company  at  the  same  time. 

The  bank  first  imdertook  to  receive  the  contributions  to  a  lottery,  con- 
sisting of  150,000  tickets,  at  £10  each,  in  1710,  A  great  rise  took  place 
in  bank  stock.  The  nation  had  been  depressed  by  war,  which,  though 
victorious,  was  expensive.  The  pride  of  the  French  had  been  humbled 
by  the  triumphs  of  the  allies,  and  they  were  compelled  to  sue  for  peace 
— a  prospect  so  gratifying  to  the  nation,  that  on  the  mere  probability, 
bank  stock  rose  from  110  to  129.  The  prospect  proved  illusive.  Louis 
resolved  to  risk  another  campaign ;  and  on  the  negotiation  being  broken 
off,  the  stock  fell  to  107.  From  "  The  Life  and  Times  of  Bishop  Bur- 
net," a  remark  may  be  gleaned,  which  strongly  illustrates  the  opinion 
entertained  by  government  of  the  importance  of  the  Bank  of  England. 


Extension  of  the  Charter — Run  on  the  Bank.  57 

"The  queen's  intention  to  make  a  change  in  her  ministers  now  began  to 
break  out.  In  June  she  dismissed  the  Earl  of  Sunderland  from  being 
Secretary  of  State,  and  presented  the  seals  to  Lord  Dartmouth,  a  Tory. 
This  gave  the  alarm,  both  at  home  and  abroad ;  but  the  queen,  to  lessen 
that,  said  to  her  subjects  here,  in  particular  to  the  governor  of  the  Bank 
of  England,  that  she  should  make  no  other  changes."  These  few  words 
mark  the  importance  of  the  bank  to  the  State ;  nor  do  they  show  less 
strikingly  the  political  tendencies  of  the  corporation,  which  regarded 
with  suspicion  a  change  of  ministry,  as  paving  the  way  to  power  of  the 
exiled  Stuarts.  These  tendencies  are  also  a  sufficient  reason  for  the 
panics  which  have  seized  the  English  people,  when  an  invasion  in  favor 
of  this  family  was  expected.  It  will  be  seen  that,  on  all  such  occasions, 
the  bank  has  experienced  a  call  for  its  gold.  In  1*713  this  effect  was 
produced,  when,  at  her  ancient  palace  of  Windsor,  the  queen  was  seized 
with  an  alarming  illness.  The  buoyant  hopes  of  the  malcontents  arose. 
An  armament  was  reported  to  be  ready  in  the  ports  of  France.  The 
directors  of  the  bank  were  overwhelmed  with  consternation  by  a  great  run 
made  upon  them  ;  and  the  imminence  of  their  position  may  be  conceived 
from  the  fact,  that  one  of  their  body  was  sent  immediately  to  the  treasurer, 
to  announce  the  danger  which  threatened  public  credit.  Measures  were 
promptly  taken  for  its  support ;  the  health  of  the  queen  was  soon  hap- 
pily renewed  ;  the  armament  proved  an  idle  alarm ;  the  Pretender  was 
in  Lorraine;  and  the  phantom  which  threatened  the  safety  of  the  bank 
ceased  with  the  fears  which  had  given  rise  to  it. 

The  same  year  was  marked  by  a  renewal  of  the  charter  until  1742 — 
an  extension  of  the  privileges  of  the  bank  for  ten  years.  Of  course  the 
proprietors  bad  to  pay  for  the  extension.  The  reign  of  Queen  Anne  had 
been  gilded  by  the  splendid  victories  of  Marlborough  and  the  chival- 
rous achievements  of  Peterborough  ;  but  victories  and  achievements 
must  be  paid  for.  An  act  was,  therefore,  passed,  to  raise  £1,200,000 
for  public  uses,  by  circulating  a  further  sum  in  exchequer  bills,  which  the 
managers  of  the  great  corporation — for  the  establishment  already  de- 
served the  title — undertook,  at  three  per  cent.,  in  consideration  of  their 
renewed  privileges.  They  were  also  to  receive  £8,000  yearly,  until  all 
the  exchequer  bills  in  existence  should  be  paid  off.  To  enable  the  direct- 
ors of  the  bank  to  effect  this,  they  were  allowed  to  call  in  money  from 
the  proprietors  to  form  additional  stock,  and  the  corporation  was  to  con- 
tinue until  the  government  debt  was  paid  off — twelve  month's  notice 
being  given  from  the  1st  of  August,  1742. 

In  the  following  year  the  last  monarch  of  the  unfortunate  house  of 
Stuart  was  approaching  her  end,  and  London  became  a  scene  of  con-' 
fusion  and  intrigue.  The  succession  was  uncertain,  and  it  was  equallv 
doubtful  whether  the  queen  would  name  the  exiled  chevalier,  or  whether 
the  house  of  Hanover  would  obtain  the  splendid  prize.  In  1714  she 
died;  her  death-bed  agitated  by  the  wrangling  and  plotting  of  political 
partisans.  The  fine  genius  of  Bolingbroke  and  the  sagacity  of  Oxford 
failed  before  the  bold  energy  of  their  opponents.  Letters  were  sent  to 
the  elector  of  Brunswick ;  a  squadron  was  prepared  to  convey  him  to 
England;  the  heralds-at-arms  were  kept  in  waiting  to  proclaim  the  new 
king ;  the  malcontents  were  overawed  in  Scotland ;  and  the  head  of  the 


58  History  of  the  Bank  of  England. 

house  of  Brunswick  ascended  tlie  Englisli  throne  as  George  I.  A  period 
fraught  -with  so  nuicli  anxiety  to  the  ^yhole  kingdom  could  not  fail  to 
affect  its  great  monetary  establishment.  The  uncertainty  of  the  future 
dynasty  produced  a  run  upon  it,  which  lasted,  without  intermission,  for 
several  days,  although  without  any  unfavorable  result,  as  its  resources 
were  equal  to  the  demand.  The  price  of  bank  stock,  however,  fell  from 
120  to  IIG. 

The  accession  of  the  first  George  must  have  caused  some  uneasiness  to 
the  friends  of  the  bank.  The  policy  of  the  new  king  was  unknown,  and 
it  appeared  equally  uncertain  whether  he  would  endeavor  to  Avin  over 
the  great  landed  proprietors,  and  with  them  all  the  important  Jacobites, 
or,  to  use  the  words  of  Smollett,  "  declare  himself  the  head  of  a  faction, 
which  leaned  for  support  on  those  who  Avere  enemies  to  the  church  and 
monarchy,  on  the  bank  and  moneyed  interest,  raised  on  usury,  and  main- 
tained by  corruption."  The  race  of  Brunswick,  however,  like  previous 
princes,  found  that  a  wealthy  body,  which  could  assist  in  procuring  sup- 
plies, was  worthy  the  support  of  the  State.  A  power  Avas  given  to  the 
latter  Avhich  it  once  Avanted,  and  the  bank  maintained  in  return  a  close 
connection  Avith  government,  Avhich  gave  additional  confidence  in  their 
credit,  additional  importance  to  their  establishment,  and  additional  divi- 
dends to  their  proprietary. 

The  rebellion  of  1 715  being  checked  before  any  demonstration  could 
be  made  in  England,  it  produced  no  effect  upon  the  bank,  and  the  excite- 
ment, kept  alive  by  numerous  trials,  and  exasperated  by  successive  exe- 
cutions, Avas  soon  subdued.  Tranquillity  being  thoroughly  restored,  the 
ministry  and  Parliament  determined  to  reduce  the  legal  rate  of  interest 
from  six  to  five  per  cent.  To  do  this,  the  aid  of  the  directors  of  the 
bank  was  necessary,  as  Avell  as  that  of  the  other  poAverful  monetary  bodies, 
and  they  agreed  to  provide  cash  for  those  creditors  preferring  their  prin- 
cipal to  a  reduced  interest.  Three  bills  passed,  under  the  names  of  the 
South  Sea  Act,  the  Bank  Act  and  the  General  Fund  Act.  The  former, 
(established  in  1*711,)  by  some  advances  to  government,  procured  sev^eral 
advantages.  By  the  bank  act,  the  governor  and  company  accepted  an 
annuity  of  £88,751  7s.  10|-d.,  or  the  principal  of  £1,775,027  l7s.  lO^d. 
in  lieu  of  the  present  annuity  of  £106,501  13s.  5d.  They  likewise  can- 
celled as  many  exchequer  bills  as  amounted  to  £2,000,000,  at  five  per 
cent,  redeemable  after  one  year's  notice,  and  agreed  to  circulate  the  re- 
maining exchequer  bills  at  three  per  cent,  and  one  penny  per  day.  It 
Avas  enacted  that  the  former  allowances  should  be  continued  to  Christ- 
mas, and  then  the  bank  should  have,  for  circulating  the  £2,561,025  re- 
maining exchequer  bills,  the  last  named  interest.  By  the  same  act  the 
bank  was  required  to  advance,  at  five  per  cent.,  part  or  all  of  £2,500,000, 
tOAvards  discharging  the  national  debt.  The  legal  rate  of  interest  was 
thus  easily  reduced  ;  and  it  is  Avorthy  of  remark,  that  all  the  fundholders 
accepted  the  terms  proposed. 

In  1718,  subscriptions  for  government  loans  Avere  first  received  at  the 
establishment ;  and  this  practice  being  beneficial  for  various  reasons,  is 
still  continued. 


Mississippi  Scheme — Royal  Bank.  59' 


CHAPTER    VII. 


THE    ItnSSISSIPri     COMPAXY FIXAXCIAL    difficulties aOYAl  BANK PRIVILEGES    OF    THE 

COMPANY   OF   THE  "WEST INFATUATION    OF   ALL  CLASSES INCREASE  OF  LUXURY COUNT 

YAN   HORN MURDER    OF    A   STOCK    BROKER ENORMOUS   PROFITS DEMAND   FOR  SPECIE. 

PANIC    COMMEXCES THE    BANK   BESIEGED UNPOPULARITY    OF    LAW DESTRUCTION  OF 

THE    COMPANY. 

A  HISTORY  of  the  Bank  of  England  and  its  times  would  scarcely  be 
complete  without  a  report  of  that  monetary  convulsion  which  shook 
France  to  the  centre,  and  preceded  the  bubble  of  the  South  Sea  scheme.* 
The  unfortunate  interference  of  the  regent  of  France  with  the  Mississippi 
Company  is  too  remarkable  an  evidence  of  the  evils  wliich  may  rise  from 
the  circulation  of  a  country  being  under  the  entire  control  of  the  State, 
not  to  demand  a  place  in  the  present  work. 

John  Law^,  the  son  of  a  Scotch  goldsmith,  was  born  in  Edinburgh. 
From  an  early  age  his  attention  was  directed  to  the  somewhat  abstruse 
studies  of  public  and  private  credit,  the  state  of  trade  and  manufactures, 
the  theory  of  taxation,  and  other  matters  connected  with  political 
economy.  His  early  life  was  marked  by  irregularities,  and  after  a  career 
noticeable  for  its  dissipation,  he  proposed  a  scheme  to  the  Scottish  people 
for  the  circulation  of  notes  on  the  security  of  land.  The  project  was  re- 
jected, and  in  a  few  years  Law  found  himself  in  Paris,  about  the  period 
of  the  death  of  Louis  XlV.f  To  a  nation  like  France,  Law  was  a 
dangerous  visitor.  The  country  groaned  beneath  its  debt.  The  luxuri- 
ous court  of  Louis  had  burthened  the  people  with  taxes,  which  yet  fell 
short  of  the  necessity.  The  nation  was  on  the  verge  of  bankruptcy. 
The  circulation  of  the  country  was  injured.  Industry  was  checked  and 
trade  destroyed.  The  financial  difficulties  of  the  regent  werej  great. 
During  the  last  years  of  Louis,  the  expenditure  of  the  nation  had  reached 
260,000,000  livres.  Paper  money  was  issued  on  the  credit  of  the  State, 
but  it  sunk  to  an  enormous  discount.  To  supply  cash,  offices  were  cre- 
ated, and  then  sold.  A  comptrollership  for  piling  wood,  and  an  inspec- 
torship of  wigs,  may  offer  some  idea  of  the  extreme  difficulty  which  could 
compel  a  great  government  to  resort  to  means  so  ludicrous.  At  this 
moment  Law  came  forward  and  proposed  a  paper  circulation  on  the 
security  of  landed  property  and  the  royal  revenues.  The  project  was 
declined  ;  and  Law,  not  a  man  to  be  easily  discouraged,  procured  letters 
patent  to  establish  a  bank,  which  proved  so  fortunate,  that  while  the 


*1711— 1'720. 

f  Died  September  1,  1715,  aged  seventy-seven  years,  and  mms  succeeded  by  his 
great-grandson,  Louis  XV.,  aged  five  years. 

XAX.  this  time,  1716,  No.ulles  was  Minister  of  Finance,  and  opposed  Law's 
schemes. 


60  History  of  the  Bank  of  England. 

Tiolos  of  the  State  were  at  a  heavy  discount,  those  of  Law's  bank  were  at 
fifteen  per  cent,  premium.  The  regent  D'Orleans  grew  jealous  of  this 
success.  By  an  arbitrary  decree,  in  1718,  lie  abolished  it,  and  established 
a  Royal  Bank,  of  which  he  made  John  Law  director-general.  The  notes 
rose  to  one  percent,  premium,  and  the  Due  D'Orleans  became  impressed 
with  the  idea  that  he  had  only  to  issue  notes  according  to  his  necessities. 
From  this  period  Law's  cherished  project  began  to  be  developed.  The 
scheme  that  rang  throughout  Europe  as  the  Mississippi  scheme  was  near 
its  accomplishment. 

The  proposition  which  he  made  to  the  regent  was  to  vest  the  privi- 
leges and  possessions  of  all  the  foreign  trading  companies,  the  great 
farms,  the  mint,  the  king's  revenues  and  the  management  of  the  bank,  in 
one  company,  which,  having  all  the  trade  and  royal  revenues,  might  mul- 
tiply the  notes  of  the  bank  to  any  extent,  doubling,  or  even  trebling,  at 
will,  the  circulating  medium,  and,  by  the  vastness  of  their  funds,  carry 
foreign  trade  and  colonial  improvements  to  a  height  hitherto  unattain- 
able. This  monopoly,  alike  unparalleled  and  impracticable,  met  the  ap- 
probation of  the  regent ;  and  letters  patent  Avere  granted  to  a  commer- 
cial company,  under  the  title  of  the  "  Company  of  the  West."  The 
whole  province  of  Louisiana,  watered  by  the  noble  river  Mississippi,  was 
granted  to  the  association,  and  200,000  shares  were  issued,  of  500  livres 
each,  and  billets  d''eiat,  then  at  sixty  to  seventy  per  cent,  discount,  were 
received  at  their  full  value  in  payment.  So  liberal  a  scheme,  together 
with  the  prospect  held  out  by  Law  of  120  per  cent,  per  annum,  procured 
a  favorable  opinion  not  only  from  the  speculative,  but  from  the  thinking. 
The  shares  were  filled  up,  and  the  company  became  creditors  to  the 
State  to  the  extent  of  a  hundred  millions  of  livres  ;  the  interest  of  which 
was  settled  at  four  per  cent. 

Law,  who  enjoyed  the  regent's  favor,  was  made  director-general  of 
the  new  association,  which  assumed  the  title  of  the  Company  of  the  In- 
dies, from  the  exclusive  privileges  of  the  East  India  Company  being 
added  to  its  already  extensive  prerogatives.  Fifty  thousand  new  shares 
were  issued  at  550  livres  each,  and  they  immediately  rose  to  1,000. 
Ever  volatile  and  inconsiderate,  the  French  people  received  Law's  prom- 
ises as  gospel.  The  new  shares  were  applied  for  with  avidity.  The 
dirty  street  Quincampoix,  in  which  Law  resided,  was  impassable.  Peo- 
ple of  the  highest  rank  clustered  about  his  dwelling  to  learn  their  destiny, 
and  delicate  women  braved  all  weathers  with  the  hope  of  enriching 
themselves.  300,000  applications  Avere  made  for  60,000  shares ;  and 
the  destiny  of  an  empire,  remarkable  for  its  national  hauteur,  seemed  in 
the  hands  of  John  Law,  the  son  of  a  Scottish  jeweller.  Advantage  was 
taken  of  this  eagerness.  300,000  new  shares  Avere  issued  at  5,000  livres 
each,  and  the  regent  availed  himself  of  the  popular  excitement  to  pay 
off  the  national  debt.  The  Avhole  of  the  foreign  trade  Avas  placed  in  the 
possession  of  the  company,  and  the  public  ran  Avith  increased  eagerness 
at  each  creation  of  stock.  Prelates,  marshals  and  peers  of  that  old  aris- 
tocracy which  once  boasted  a  Bayard,  cringed  to  the  lackeys,  and 
swarmed  in  the  ante-chamber  of  a  Scottish  adventurer.  A  rumor  of  his 
indisposition  sent  the  stock  down  nearly  200  per  cent.,  and  the  announce- 
ment of  his  recovery  sent  it  up  in  the  same  proportion.     The  frenzy  be- 


Increase  of  Luxury.  61 

came  general.  A  rage  for  shares  infatuated  every  rank.  The  price 
reached  10,000  livres  in  September,  1819,  and  the  air  echoed  with  Mis- 
sissippi and  Quincarapoix.  There  appeared  but  one  aim  and  one  pursuit. 
From  six  in  the  morning  until  eight  in  the  evening  the  street  was  filled 
with  fervent  worshippers  of  mammon.  The  dissolute  courtiers  of  the 
yet  more  dissolute  regent  shared  in  the  spoil.  The  princes  of  the  blood 
were  not  too  proud  to  participate.  They  mingled  with  the  eager  crowd ; 
they  added  their  voices  to  the  Babel-like  confusion ;  and  when  they  won 
the  money  of  the  canaille,  thought  they  did  them  too  much  honor  iu  ac- 
cepting it.  The  ante-chamber  of  Law  was  crowded  by  women  of  rank 
and  beauty — the  mistress  of  Law  was  flattered  by  ladies  as  irreproachable 
as  the  court  of  the  regent  would  allow  them  to  be — and  interviews  with 
Law  were  sought  with  so  much  assiduity,  that  one  lady  caused  her  car- 
riage to  be  upset  to  attract  his  attention  ;  and  another  stopped  before  his 
hotel,  and  ordered  her  servants  to  raise  the  cry  of  "  Fire."  The  people 
emulated  one  another  in  luxury.  Equipages  more  remarkable  for  splen- 
dor than  taste  rolled  about  the  streets.  Footmen  got  up  behind  their 
own  carriages,  so  accustomed  were  they  to  that  position.  One  of  those 
who  had  done  so,  recollected  himself  in  time  to  cover  his  mistake  by 
saying  he  wished  to  see  if  room  could  be  made  for  two  or  three  more 
lackeys,  whom  he  had  resolved  to  hire.  The  son  of  a  baker,  wishing  a 
service  of  plate,  sent  the  contents  of  a  jeweller's  shop  to  his  wife,  with 
directions  to  arrange  the  articles  properly  for  supper.  The  opera  was 
crowded  with  cooks,  ladies'  maids,  and  grisettes,  dressed  in  the  superbest 
style  of  fashion,  who  had  fallen  from  a  garret  into  a  carriage. 

The  Rue  Quincampoix  became  too  confined  for  the  mighty  fever  which 
infested  the  metropolis,  and  the  Place  Vendome,  chosen  in  its  stead, 
soon  presented  the  appearance  of  a  fair.  But  Law  was  again  compelled 
to  move,  owing  to  the  complaint  of  the  Chancellor,  who  could  not  hear 
the  pleading  of  the  advocates.  The  projector  then  purchased  the  Hotel 
de  Soissons,  and  in  its  beautiful  gardens  established  his  temple.  "  In 
the  midst,  among  the  trees,"  says  Dr.  Mackay,  "about  five  hundred  small 
tents  and  pavilions  were  erected.  Their  various  colors,  their  gay  ribbons 
and  banners,  the  busy  crowd  which  passed  in  and  out,  the  hum  of  voices, 
the  noise,  the  music,  the  strange  mixture  of  business  and  pleasure,  com- 
bined to  give  the  place  the  air  of  enchantment." 

The  various  anecdotes  of  contemporary  literature  attest  the  mania.- 
The  private  letters  of  the  period  confirm  it.  A  few  hours  often  witnessed 
an  alteration  in  the  price  of  ten,  twenty  and  thirty  per  cent.  A  servant 
who  was  sent  by  his  master  to  sell  two  hundred  and  fifty  shares,  found 
the  value  had  risen  sufiiciently  to  enable  him  to  make  .£20,000  sterling 
by  the  difference,  with  which  he  departed.  The  nobility  sought  alliance 
with  many  of  the  vulgar  rich  ;  and  that  feeling,  so  nearly  allied  to  con- 
tempt, with  which  they  too  often  regard  the  poor,  though  refined  men, 
faded  away  before  an  eager  desire  to  associate  with  and  profit  by  the  rich, 
but  coarse,  speculator.  Law's  coachman  made  a  fortune  ;  and  when  his 
master  requested  him  to  supply  a  substitute,  brought  two,  saying,  which- 
ever the  projector  refused  he  would  take  for  himself.  Luxury  reigned 
pre-eminent.  The  arts  were  encouraged.  Beautiful  paintings  were  im- 
ported. The  graceful  bust,  the  sculptured  marble,  the  pictured  tapestry, 
5 


62  History  of  the  Bank  of  England. 

were  no  more  the  exclusive  property  of  the  peer.  The  aristocracy  were 
no  longer  the  sole  possessors  of  the  elegancies  which  refine  the  mind. 

"  Money  lightly  gained  was  lightly  spent,"  says  Chambers  ;  "  palaces 
rose  on  all  sides  with  the  rapidity  of  enchantment ;  fortunes  were  lavished 
on  furniture,  equipages,  dress  and  jewels ;  and  entertainments  were 
habitually  given,  which  seemed  to  have  had  their  prototypes  in  the  fairy 
tales."  Paris  was  filled  with  foreigners,  tempted  by  the  reports  whicli 
circulated  far  and  wide.  Nearly  half  a  million  were  located  there  at  one 
time.  In  vain  did  Marshal  Villars,  with  more  zeal  than  discretion, 
harangue  the  people  in  the  open  street  upon  their  "  disgusting  avarice." 
They  indulged  themselves  with  a  laugh,  as  they  hurried  towards  the  mart  of 
mammon,  to  purchase  shares  in  this  unrivalled  bubble.  That  the  passion 
for  paper  was  carried  to  a  great  length  may  be  collected  from  the  phrase- 
ology of  the  day.  To  the  question,  "  Have  you  any  gold  ?"  "  Nothing 
to  do  with  it,"  was  the  regular  answer.  The  herald's  college  was  disre- 
garded. The  armorial  bearings  of  a  peer  were  placed  on  the  carriage  of 
a  parvenu.  Folly  came  in  the  train  of  wealth ;  and  the  gaiety  of  the 
people  was  great.  But  the  provinces  grew  envious  of  the  profits  of  the 
capital.  Land  was  sold  for  any  price  it  would  bring ;  and  the  proprietors 
hastened  to  Paris  with  the  proceeds  to  make  or  mar  their  fortune. 
Bishops  consecrated  by  partaking  of  the  follies,  and  the  clergy  forgot 
the  precepts  which  they  enjoined  in  the  practice  they  pursued. 

*'  At  that  epoch  of  scandal  and  opprobrium,"  says  M.  de  Tocqueville, 
"  there  was  no  folly  or  vice  in  which  the  high  society  did  not  take  the 
lead.  The  degradation  of  men's  minds  was  equal  to  the  corruption  of 
their  manners."  Assassinations  and  robberies  were  common.  The 
Count  Antoine  Van  Horn,  brother  to  a  reigning  prince,  related  to  half 
the  noble  families  of  France,  and  connected  with  the  Regent  Orleans, 
was  an  evidence  of  the  crime  produced  by  this  epoch.  The  description 
given  of  Van  Horn  is  striking :  "  His  face  was  as  pale  and  as  beautifully 
chiselled  as  that  of  an  antique  statue,  and  a  pair  of  singularly  wild  and 
brilliant  eyes  shed  over  the  whole  what  might  have  seemed  preternatural 
light."  A  contemporary  states  that  the  ladies  of  the  period — with  whom 
Van  Horn  was  a  greater  favorite  than  with  their  husbands  or  brothers — 
declared  that  it  was  "  almost  impossible  to  support  his  ardent  gaze." 
The  man  thus  remarkable  for  beauty  became  yet  more  remarkable  for 
crime.  The  gay  city  of  Paris  was  suddenly  startled  by  a  rumor  that  a 
Hebrew  stock-broker  had  been  robbed  of  property  worth  one  hundred 
thousand  crowns,  and  afterwards  murdered ;  not  in  some  lonely  and  un- 
frequented place,  but  in  the  broad  day,  in  a  crowded  house,  and  in  the 
very  heart  of  the  city.  The  rumor  spread  ;  the  excitement  increased  ;  a 
name,  more  known  than  respected,  was  whispered,  and  Count  Antoine 
Van  Horn,  the  scion  of  one  of  the  haughtiest  houses  in  Europe,  was 
openly  accused  of  the  murder.  The  unfortunate  broker  had  been  al- 
lured to  a  cabaret ;  cries  were  heard  from  the  interior  of  the  room ;  the 
waiter  locked  the  door ;  and  the  aristocratic  count  was  taken  almost  red- 
handed. 

The  trial  of  Van  Horn  commenced  on  the  following  day,  and  "  the 
relatives  of  the  accused,"  says  Chambers,  "  now  adopted  a  plan  which 
throws  a  curious  light  upon  the  feelings  and  manners  of  the  time.     On 


Increase  of  Luxury — Fate  of  Van  Horn.  63 

the  day  of  tlie  trial,  they  assembled  at  the  place  of  justice  in  a  body  of  fifty- 
seven,  both  male  and  female,  and  lined  the  long  corridor  which  led  to 
the  court  room.  As  the  judges  passed  through  this  proud  array,  they 
were  saluted  in  a  mournful  and  supplicatory  manner  by  the  highest  and 
noblest  of  Europe,  and  passed  into  the  hall  of  trial  with  their  minds 
strongly  impressed,  even  if  their  hearts  were  not  melted,  by  the  imposing 
scene." 

The  evidence  was  clear,  and  the  punishment  of  being  broken  alive  on 
the  wheel  was  awarded  to  the  criminal.  Disappointed  in  their  efforts  in 
one  way,  the  nobility  connected  with  the  house  of  Van  Horn  attempted 
another  mode  of  saving  the  assassin.  A  petition,  praying  for  mercy  on 
the  ground  of  insanity,  signed  by  cardinals,  archbishops,  dukes  and 
marquisses,  was  presented  to  the  regent.  Many  were  not  sufficiently 
noble  to  sign  the  paper,  and  the  honor  of  claiming  blood-relationship 
with  a  murderer  was  keenly  contested.  The  regent  was,  however,  inex- 
orable ;  and  when,  ^s  a  last  resource,  it  was  represented  that,  in  the 
armorial  bearings  of  his  mother,  there  was  the  escutcheon  of  Van  Horn, 
he  only  signified  his  will  by  saying,  "  Very  well,  gentlemen,  I  will  then 
share  the  disgrace  with  you."     Another  writer  says  his  reply  was  in  the 

words  of  CORNEILLE  : 

"  Le  crime  fait  la  lionte,  et  non  pas  I'echafaud." 

The  prince  remained  firm,  and  the  murderer  perished  on  the  wheel, 
after  refusing  to  take  a  cup  of  poison,  handed  to  him  by  one  of  his  rela- 
tives. 

In  the  mean  time,  the  mania  continued.  The  profits  acquired  by  Law 
were  enormous.  Fourteen  estates,  the  titles  of  which  were  attached, 
were  purchased  by  him.  The  Marquisate  of  Rosny,  a  title  originally 
belonging  to  the  illustrious  Sully,  he  who  honored  Henri  Quatre  by 
being  his  minister  and  friend,  was  amongst  the  number.  The  people  of 
the  Scottish  capital  were  proud  of  calling  him  fellow-citizen,  and  con- 
veyed the  freedom  of  the  good  town  in  a  golden  snuflf-box.  The  only 
obstacle  to  the  projector's  advancement  to  the  highest  offices  of  the  State, 
was  his  religion ;  and  Law,  who  probably  would  have  turned  Hindoo  as 
easily,  changed  his  profession  of  faith  from  protestant  to  catholic,  to  se- 
cure the  comptroller-generalship  of  the  finances.  Scientific  academies 
honored  him  by  electing  him  a  member,  says  a  modern  writer,  and  "  the 
flattering  incense  of  poetry  was  ofiered  up  at  the  same  shrine  with  the 
homage  of  an  infatuated  people."  In  one  week.  Law  paid  the  Count 
D'EvREUx  for  the  Compte  of  Tancarville,  80,000  livres ;  offered  to  the 
Prince  of  Carignan  1,100,000  for  the  Hotel  de  Soissons ;  500,000  to  the 
Marchioness  Beuvron  for  her  estate  of  Lillebonne,  and  1,700,000  livres 
to  the  Marquis  of  Sully  for  his  Marquisate  of  Rosny. 

The  credit  of  the  bank  was  at  its  height  in  November,  1719,  when  six 
shares  were  sold  for  ten  thousand  livres,  and  the  directors  lent  any 
amount  of  money  at  two  per  cent.  The  first  blow  was  struck  by  the 
Prince  de  Conti,  who  sent  an  enormous  quantity  of  paper  to  change  into 
metal.  Three  wagons  Avere  required  to  remove  it,  and  Law  drew  the 
attention  of  the  regent  to  the  mischief  such  conduct  must  occasion  ;  two- 
thirds  of  the  specie,  by  a  despotic  decree,  were  ordered  to  be  refunded.. 


64  History  of  the  Bank  of  England. 

Bat  there  were  others  who  saw  the  coming  storm  and  acted  more  judi- 
ciously. One  house,  famous  for  tlicir  funded  operations,  sent  notes  qui- 
etly and  by  degrees,  and  when  they  had  amassed  a  sufficient  quantity  of 
treasure,  placed  it  in  a  cart,  covered  it  with  straw,  and  carrie<i  it  off  in 
triumph ;  others  purchased  extensive  jewelry  and  sent  it  to  England  or 
Belgium,  whither  they  soon  followed.  These  symptoms  increased. 
There  was  a  constant  drain  of  bullion  from  the  bank.  The  speculators 
began  to  think  of  realizing  their  immense  profits.  It  was  computed  that 
five  hundred  millions  of  livres,  in  specie,  were  sent  out  of  the  country. 
"  Knowing  no  means,"  says  Mr.  Gaspey,  in  his  "  Pictorial  History  of 
France,"  "  by  which  he  could  arrest  the  great  and  alarming  decline  in 
price  which  speedily  commenced,  Law  prevailed  on  the  regent  to  issue 
an  ordinance  proscribing  the  use  of  gold  and  silver  as  money,  and  forbid- 
ding private  individuals  to  keep  in  their  houses  more  than  five  hundred 
livres,  in  specie.  This  odious  measure  caused,  in  the  course  of  a  single 
month,  forty  millions  to  be  deposited  in  the  coffers  of  the  bank. 

But  it  was  not  by  such  means  that  damaged  credit  could  be  restored. 
The  distrust  of  the  paper  constantly  increased ;  every  one  sought  more 
anxiously  from  day  to  day  to  convert  his  notes  into  cash ;  and  in  conse- 
quence of  this  an  order  was  issued,  dated  May  21st,  1720,  which  reduced 
their  value  one-half,  and  suspended  their  payment  by  authority.  Then 
rose  the  cry  of  rage,  wild  and  menacing,  against  the  author  of  the  system, 
and  against  those  who  had  taken  him  under  their  patronage.  They  had, 
however,  allowed  the  payment  of  notes  of  ten  livres.  The  men  of  the 
market-halls,  sailors  and  others,  bought  these  at  low  prices,  and  pressed 
towards  the  doors  of  the  bank,  making  a  passage  for  themselves  by  blows. 
None  but  such  persons  could  venture  to  approach. 

On  l7th  Jul}',  1720,  three  men  were  killed  in  the  crowd.  Sinister 
voices  were  heard  to  exclaim,  "  If  there  are  any  who  are  weary  of  life,  let 
them  follow  us."  Notes  like  the  following  were  sent  from  house  to  house. 
"  Sir,  or  Madam :  Notice  is  hereby  given  that  it  is  intended  to  make  an- 
other St.  Bartholomew  on  Saturday  or  Sunday.  Do  not  go  out  yourself, 
nor  suffer  your  servants  to  do  so.  God  preserve  you  from  fire.  Make 
your  neighbors  acquainted  with  this. — May  2oth,  1720."  In  the  month 
of  September,  for  a  single  mark  of  gold,  1,800  livres,  in  bank  notes,  were 
given,  which,  ten  months  before,  were  valued  at  160,000  livres  in  specie  ; 
and  all  the  ecclesiastics  and  hospitals  in  France  were  prohibited  from  de- 
positing their  money  in  any  security  excepting  Mississippi  stock.  Still  it 
continued  to  decline.  Various  means  were  tried  to  prevent  this  :  the 
sole  property  in  one  island  was  given  to  the  company  ;  and  pamphlets 
published  to  demonstrate  to  the  proprietors  that  the  stock  had  no  right 
to  fall.  On  21st  May,  the  fatal  decree  just  alluded  to  came  out.  Under 
pretence  of  having  lowered  the  value  of  coin,  it  was  declared  necessary  to 
reduce  the  nominal  value  of  the  notes  and  India  stock,  the  former  to  half, 
and  the  latter  from  nine  thousand  livres  a  share  to  five  thousand.  Bank 
notes  instantly  lost  their  currency ;  and,  to  prevent  tumults,  the  guards 
were  placed  everywhere.  The  Parliament  remonstrated,  and  another  de- 
cree revoked  the  former.  On  29th  May,  1720,  Law  resigned  his  office 
of  Comptroller-General  of  Finance,  and  it  was  thought  necessary  to  allow 


Suspension  of  Payments —  Unpopularity  of  Law.  65 

him  a  detachment  of  Swiss  soldiers,  to  save  liim  from  being  torn  to  pieces 
by  the  populace. 

Every  three  or  four  days  some  new  decree  was  issued.  A  sufficient 
number  to  fill  two  quarto  volumes  were  circulated,  and  are  now  collected. 
The  people  were  filled  with  indescribable  terror,  and  began  to  send  their 
valuables  abroad,  and  a  decree  came  out  to  prevent  them.  Merchants  be- 
gan to  refuse  the  notes  at  any  price,  and  a  decree  was  immediately  pro- 
mulgated forbidding  any  one  to  reject  them.  This  made  the  possessors 
run  with  them  to  the  bank,  and  then  another  decree  decided  "  that, 
owing  to  the  tumult  at  the  bank,  on  account  of  paying  the  notes,  the  re- 
gent thought  fit  to  suspend  the  payment  of  them  till  further  orders." 
"There  was  not  cash  in  the  bank,"  says  Anderson,  "  to  pay  the  fiftieth 
part  of  them."  Persons  were  forbidden  from  meeting  or  assembling  to- 
gether under  any  pretence,  and  the  military  were  placed  in  various  situa- 
tions to  disperse  them. 

A  consternation,  soon  converted  into  rage,  seized  all  ranks.  Disorder 
and  confusion  reigned  everywhere.  Inflammatory  libels  were  posted  up, 
and  seditious  papers  distributed.  The  life  of  the  regent  was  threatened. 
Great  allowances  must  be  made,  however,  as  upwards  of  ninety  millions 
of  notes  were  in  circulation  when  the  bank  stopped,  and  all  classes  and 
all  conditions  were  in  a  state  of  bankruptcy.  The  depreciation  of  this 
paper  was  so  great  that  a  man  might  have  starved  with  a  hundred  mil- 
lions in  his  pocket.  Law  was  compelled  to  seek  interviews  with  the  re- 
gent by  night,  as  he  had,  on  one  occasion,  narrowly  escaped  with  life  from 
the  enraged  multitude.  Fifteen  people  were  pressed  to  death  at  the  doors 
of  the  bank,  in  their  eagerness  to  obtain  specie,  and  eight  or  nine  thou- 
sand of  the  indignant  sufterers  proceeded,  with  three  of  the  bodies,  to  the 
gardens  of  the  Palais  Royal,  where  they  destroyed  the  coach  of  Law,  and 
demanded  his  punishment.  The  Chamber  of  Deputies  was  sitting,  and 
the  report  spread  of  the  destruction  of  the  carriage.  Such  was  the  vin- 
dictive feeling  that  one  account  says,  "  the  members  rose  simultaneously, 
and  expressed  their  joy  by  a  loud  shout ;  while  one  man,  more  zealous 
in  his  hatred  than  the  rest,  exclaimed,  'And  Law  himself,  is  he  torn  to 
pieces?'"  Another  report  says,  the  president,  overpowered  with  joy, 
■was  seized  with  the  spirit  of  rhyme,  if  not  of  poetry,  exclaiming, 

"  Messieurs  !  Messieurs  !  bonne  nouvelle  ! 
Le  earosse  de  Lass  est  reduit  en  Canelle  !" 

The  death-blow  to  all  hopes  that  the  company  would  redeem  its  credit 
came  in  November,  1720.  Their  privileges  were  taken  from  them,  and 
they  were  reduced  to  a  mere  private  company.  Law  left  the  kingdom, 
escorted  by  some  horse-guards,  after  declining  the  assistance  proffered 
by  the  regent.  It  is  a  remarkable  proof  of  this  man's  faith  in  the  suc- 
cess of  his  plan,  that  whatever  money  he  bad  made  during  the  infatua- 
tion, he  invested  in  the  soil  of  France  ;  and  that,  when  he  left  the  coun- 
try, the  only  property  he  carried  with  him  was  a  diamond  worth  about 
,£5,000.  Various  other  methods  of  abating  the  evil  were  adopted. 
Commissioners  and  tribunals  were  instituted.  Six  hundred  millions  of 
notes  were  turned  into  stock,  and  many  large  sums  created  into  termi- 
nable and  life  annuities.     All  the  malversations  which  had  been  com- 


60  History  of  the  Bank  of  England, 

mitted  with  impunity  during  the  excitement  were  rigidly  inquired  into. 
Many  dishonest  deeds  were  brought  to  light.  Some  peculators  were  fined, 
and  others  imprisoned.  An  abbe  and  a  master  of  requests  were  con- 
demned to  decapitation.  By  these  and  other  means,  together  with  the 
consolation  which  time  ever  brings,  the  good  people  of  Paris  recovered 
their  gaiety. 

After  a  short  residence  on  the  continent,  Law  came  to  England,  where 
he  dwelt  during  the  existence  of  that  bubble,  which  must  have  forcibly 
reminded  him  of  his  own  career,  and  which  followed  in  the  train  of  the 
Mississippi  scheme.  It  seemed  as  if  they  who  had  escaped  from  Paris 
had  brought  the  epidemic*  with  them ;  and  that  the  sober  London  citi- 
zens were  seized  with  the  same  mania  which,  but  a  few  months  before, 
had  turned  all  the  heads  in  Paris.  Many  who,  away  from  that  furious 
frenzy,  had  laughed  with  national  heartiness  at  the  Parisians,  found 
themselves,  at  a  later  period,  weeping  and  wailing  at  their  madness  in 
following  the  example. 

It  is  difficult  to  calculate  to  what  extent  the  English  bubblef  may  have 
resulted  from  the  French  project.  It  is  certain  that  the  Mississippi  Com- 
pany arose  in  some  degree  from  the  Darien  undertaking.  Mr.  Law  con- 
fessed that  the  facility  with  which  he  saw  the  love  of  enterprise  commu- 
nicate itself  throughout  all  classes  of  Scottish  society,  convinced  him  of 
the  ease  with  which  a  similar  effect,  on  a  grander  scale,  might  be  pro- 
duced ;  and  this  knowledge  increased,  if  it  did  not  cause,  the  great  de- 
lusion of  which  he  was  the  officiating  high  priest.  As  the  Mississippi 
project  was  encouraged  in  some  degree  by  the  Darien  scheme,  so  may 
the  fever  of  the  South  Sea  bubble  have  been  caught  from  the  contagion, 
and  magnified  by  the  proximity  of  the  company  of  the  West.  For  this 
reason,  a  slight  sketch  has  been  given  of  that  enormous  fraud,  which  pre- 
ceded the  project  about  to  be  related.  "v 


*  To  add  to  the  accumulated  evils  of  the  time,  the  plague  raged  at  Marseilles 
nearly  ten  months  of  this  year. 

f  The  ostensible  purpose  was  for  improving  the  public  credit  of  England,  and 
providing  for  the  floating  debt,  then  £10,000,000.  According  to  Haeley's  scheme, 
the  whole  iinfunded  debt,  including  exchequer  bills  and  all  other  debentures,  was  to 
be  thrown  into  one  fund,  bearing  an  interest  of  six  per  cent.;  and  in  addition  to 
this  boon,  the  holders  were  to  enjoy  the  monopoly  of  a  trade  to  the  shores  of  South 
America,  which,  it  was  hoped,  would  prove  not  less  lucrative  than  the  commerce  to 
the  East  Indies.  The  spirit  of  speculation  was  further  indicated  in  1712-'13,  when 
Queen  Anne,  of  England,  announced  to  Parliament  that  a  new  market  for  slaves,  in 
Spanish  America,  had  been  opened  by,  and  secured  to  Englishmen.  In  1711,  the 
Irish  Linen  Board  was  formed.  In  1713,  English  newspapers  were  first  stamped. 
At  this  period  (1714)  "  The  Crisis,"  by  Dick  Steele,  and  "  The  Public  Spirit  of  the 
Times,"  by  Swift,  caused  great  excitement.  The  publisher  of  the  latter  was  pun- 
ished. The  rate  of  interest  this  year  (1714)  was  fixed  at  five  per  cent.  Specula- 
tion was  also  rife  on  the  continent.  The  Bank  of  Vienna  was  established  the  same 
year.  Among  other  literary  celebrities  of  the  day  was  De  Foe's  "  Robinson  Cru- 
Boe,"  issued  in  1715. — Am.  Ed. 


South  Sea  Bubble.  67 


CHAPTEE  VIII. 

SOUTH  SEA  BUBBLE — ITS  COMMENCEMENT — RIVALRY  WITH  THE  BANK  OF  ENGLAND — 
LUXURY  OF  THE  PERIOD NEW  COMPANIES EXTRACTS  FROM  CONTEMPORARY  LITERA- 
TURE  ROYAL  EXCHANGE    AND    LONDON   ASSURANCE    CORPORATIONS BANK    CONTRACT 

PANIC  OF   THE  PEOPLE PARLIAMENTARY  INQUIRY  AND  PUNISHMENT  OF  THE  PECULATORS. 

The  history  of  the  year  1720*  is  the  history  of  the  South  Sea  dehi- 
sion.  Anderson  says  :  "  It  is  a  year  remarkable  beyond  any  other  which 
can  be  pitched  upon  for  extraordinary  and  romantic  projects."  It  is  a 
history  of  wild  excitement,  and  of  wilder  despair.  It  extended  to  all 
ages  and  to  all  classes ;  it  created  hopes  which  it  never  realized ;  it 
changed  magnificent  dreams  into  dark  realities.  We  have  seen,  in  our 
own  time,  how  a  fierce  lust  after  money  has  overcome  the  calm  calcula- 
tion of  the  financier,  the  cool  deduction  of  the  mathematician,  and  the 
equability  of  the  Christian.  How  the  caution  of  the  capitalist  has  yielded 
to  the  frenzy  of  desire ;  how  the  merchant,  whose  name  stood  highest  in 
the  annals  of  commerce,  and  whose  credit  was  only  limited  by  his  con- 
science, has  placed  both  name  and  credit  in  the  hands  of  the  unscrupu- 
lous adventurer.  We  have  seen  the  names  of  men  whom  their  country 
delighted  to  honor,  stand  side  by  side  with  those  whose  reputation  was 
more  than  dark  or  doubtful.  We  have  seen  the  man  who,  in  his  regular 
business,  would  cautiously  weigh  and  coldly  scan  every  circumstance  that 
might  afiect  the  gain  of  fifty  pounds,  throw  the  honorable  profits  of  a 
life  into  a  scheme  which  promised  fifty  per  cent.  Such  are  the  fevers 
and  inflammations  of  commercial  life  at  present,  and  they  were  the  same 
a  century  ago. 

"  Were  it  not,  in  its  consequences,  so  full  of  the  materials  that  make 
tragedy,"  remarks  a  writer  of  the  present  day,  '*  the  South  Sea  bubble 
might  have  been  represented  on  the  stage  as  an  admirable  farce,  satirizing 
more  broadly  than  comedy  would  have  thought  befitting  her  dignity,  or 
the  common  sense  of  probability,  the  eternal  passion  for  wealth."  Al- 
though the  propriety  of  public  competition  is  as  unquestionable  in  gov- 
ernments as  in  individuals,  yet  the  doubt  may  fairly  arise  how  far  it  is 
to  be  encouraged  to  the  prejudice  of  a  valuable  assistant,  or  to  what 
extent  the  bidder,  who  ofiers  extravagant  advantages,  is  to  be  supported. 
We  pause  before  we  enter  the  shop  of  the  man  who  marks  his  goods  be- 
low the  cost  price ;  we  respect  the  trader  who  keeps  the  even  tenor  of 
his  way,  without  professing  to  sell  at  enormous  sacrifices.  How  much 
longer,  then,  should  a  State  hesitate  to  accept  proposals  which  are  not 
only  extravagant,  but  utterly  impracticable.  Upon  these  grounds  the 
ministers  of  1720  are  chargeable  with  the  ruin  and  the  wretchedness 
shortly  to  be  related.     Smollett  writes : 

*  Bremen  had  been  recently  (lYlG)  sold  to  George  I.,  the  Elector  of  Hanover, 
and  King  of  Great  Britain.  Newfoundland,  Hudson's  Bay  and  Acadia  had  been 
ceded  to  Great  Britaiii  by  France ;  and  the  spirit  of  foreign  adventure  was  not  con- 
fined to  the  South  Sea  scheme  and  the  Mississippi  bubble  (1715.) 


68  History  of  the  Bank  of  England. 

"The  king  having  recommended  to  the  Commons  the  consideration  of 
proper  means  for  lessening  the  national  debt,  was  a  prelude  to  the  famous 
South  Sea  Act.  The  scheme  was  projected  by  Sir  John  Blunt,  who 
had  been  bred  a  scrivener,  and  was  possessed  of  all  the  cunning,  plausi- 
bility and  boldness  requisite  for  such  an  undertaking ;  he  communicated 
his  plan  to  Mr.  Aislabik,  the  Chancellor  of  the  Exchequer,  as  well  as 
one  of  the  secretaries  of  State  ;  he  answered  all  their  objections,  and  the 
project  was  adopted ;  they  foresaw  their  own  private  advantage  in  the 
execution  of  the  design,  which  was  imparted  in  the  name  of  the  South 
Sea  Company,  of  which  Blunt  was  a  director,  who  influenced  all  their 
proceedings."  The  pretence  for  the  scheme  was  to  discharge  the  national 
debt*  by  reducing  all  the  funds  into  one. 

Upon  the  22d  of  January,  1720,  the  House  of  Commons  resolved  itself 
into  a  committee,  to  take  the  subject  into  consideration  ;  and  a  subse- 
quent proposition,  made  by  the  South  Sea  Company,  to  unite  the  whole 
of  the  debts  of  the  State — amounting  to  £30,981,712 — at  five  percent., 
until  1727,  and  after  that  period  at  four  per  cent.,  for  which  they  were  to 
pay  three  millions  and  a  half,  met  with  great  approbation  from  the  mem- 
bers of  the  government.  But  the  Bank  of  England  had  many  friends  in 
the  House  of  Commons.  The  great  services  rendered  by  this  corpora- 
tion were  brought  forward  ;  a  strong  representation  was  made  of  the  in- 
justice of  thrusting  so  important  a  body  aside  for  those  who  had  done 
nothing  to  assist  the  State  ;  and  a  postponement  of  the  question  for  five 
days  was  obtained.  This  time  was  not  lost  upon  the  bank  authorities,  who 
oft'ered  five  millions  for  the  same  privileges,  being  an  advance  of  one 
million  and  a  half  on  the  proposition  of  the  South  Sea  Company.  The 
government  found  that  the  delay  was  highly  favorable  ;  no  sooner  was 
the  ofter  of  the  bank  known,  than  the  directors  of  the  South  Sea  Com- 
pany called  a  meeting ;  and  at  a  general  court,  they  were  instructed 
to  obtain  the  preference  at  any  cost ;  their  off"er  of  three  millions 
and  a  half  was  increased  to  upwards  of  seven  and  a  half  millions.  But 
the  members  of  the  first  monetary  establishment  in  the  kingdom  were 
not  to  be  outdone ;  and,  seized  with  the  same  emulation  which  animated 
the  South  Sea  Company,  they  proposed  more  advantageously  in  several 
respects,  and  offered  to  give  £1,700  bank  stock  for  ever  hundred  pounds 
irredeemable  long  annuities.  *'  Let  any  one,"  says  Anderson,  "  consider 
how  this  was  possible."  Fortunately  for  the  Bank  of  England,  but  un- 
fortunately for  the  country,  the  ofter  of  the  South  Sea  Company  met  with 
most  favor.  The  former  ceased  its  bidding  ;  the  latter  reuiained  in  pos- 
session of  its  dangerous  bargain.  At  one  time  there  appears  to  have 
been  some  idea  of  dividing  the  advantage  between  the  bank  and  the 
South  Sea  Company ;  but  Sir  John  Blunt  is  stated  to  have  exclaimed, 
"  No,  Sir  !  we  will  never  divide  the  child." 

The  very  rumor,  in  I7l9,f  that  the  South  Sea  Company  were  ambitious 

*  The  Sinking  Fund  act,  projected  by  Walpole,  had  been  passed  in  the  year  1717. 
The  same  year,  guineas  were  reduced  from  22  to  21  shillings.  There  was  then 
prevalent  in  England  a  commercial  jealousy  of  the  Dutch.  In  1718  the  London 
custom-house  was  burnt. 

•}•  In  November,  1719,  peace  had  followed  the  war  between  Holland  and  England ; 
one  million  of  dollars  was  to  be  paid  by  Hanover  for  the  cession  of  Bremen  and 
Verden. 


Luxury  of  the  Period.  69 

of  incorporating  with  their  own  all  the  funds  of  the  bank,  East  India 
Company  and  Exchequer,  raised  the  price  of  their  stock  to  126  ;  and  no 
sooner  was  the  preference  given  to  them  over  their  competitors  known, 
than  a  signal  frenzy  marked  alike  the  city  and  the  suburb.  Large  pre- 
miums were  paid  for  the  refusal  of  stock  at  high  prices,  and  on  the  2d 
of  June,  1'720,*  it  rose  to  890.  Some  of  the  directors  were  created  bar- 
onets for  "their  great  services;"  and  in  a  short  time  it  reached  1,000. 
Artifice  and  exaggeration  were  resorted  to,  to  maintain  this  unnatural 
elevation.  Fifty  per  cent,  was  confidently  predicted  ;  inestimable  mar- 
kets and  valuable  acquisitions  in  the  South  Seas  were  promised ;  and 
mines  of  hidden  treasure  mysteriously  alluded  to  by  the  agents  of  the 
scheme.  The  public  mind  was  dazzled  ;  all  the  available  resources  of  the 
kingdom  were  embarked  in  wild  speculations  and  rash  undertakings. 
Change  Alley  was  crowded  with  peers  of  the  realm,  who  forgot  their 
pride ;  country  gentlemen,  who  forsook  their  homes ;  clergymen,  who 
disregarded  the  dignity  of  their  calling ;  and  ladies,  who  forgot  their 
natural  timidity,  in  the  hope  of  making  money.  The  monarch  was  said 
to  have  profited  by  it.  His  ill-favored  German  mistresses  made  great 
fortunes  and  sent  them  over  to  Hanover ;  and  the  only  exceptions  among 
the  ministry  and  nobility  of  the  day  were  asserted  to  be  the  Dukes  of 
Argyll  and  Roxburgh,  and  Lord  Stanhope.  On  the  5th  August,  may 
be  read  in  a  contemporary  journal,  "  Our  South  Sea  equipages  increase 
every  day;  the  city  ladies  buy  South  Sea  jewels;  hire  South  Seamaids; 
take  new  country  South  Sea  houses ;  the  gentlemen  set  up  South  Sea 
coaches,  and  buy  South  Sea  estates ;  they  neither  examine  the  situation, 
the  nature  or  quaUty  of  the  soil,  or  price  of  the  purchase,  only  the  annual 
rent  and  the  title ;  for  the  rest,  they  take  all  by  the  lump,  and  pay  forty 
or  fifty  years  purchase." 

That  the  king  favored  this  unhappy  scheme  may  be  gathered  from  the 
correspondence  of  the  day.  On  the  18th  of  April,  1720,  the  Duchess  of 
Ormond  wrote  to  Swift,  "  You  remember,  and  so  do  I,  when  the  South 
Sea  was  said  to  be  my  Lord  Oxford's  brat,  and  must  be  starved  at 
nurse.  Now,  the  king  has  adopted  it  and  calls  it  his  beloved  child ; 
though  perhaps  you  may  say,  if  he  loves  it  no  better  than  his  son,  it 
may  not  be  saying  much ;  but  he  loves  it  as  well  as  he  does  the  Duchess 
of  Kendal,  and  that  is  saying  a  good  deal.  I  wish  it  may  thrive,  for 
some  of  my  friends  are  deep  in  it;  I ivish  you  were  so  tooP''  What  a 
proof  is  the  latter  sentence  of  the  prevailing  madness.  Prior  writes,  "  I. 
am  tired  of  politics,  and  lost  in  the  South  Sea.  The  roaring  of  the 
waves,  and  the  madness  of  the  people,  were  justly  put  together.  It  is  all 
wilder  than  St.  Anthony's  dream  ;  and  the  bagatelle  is  more  solid  than 
any  thing  that  has  been  endeavored  here  this  year." 

And  all  these  anticipations  were  indulged  in,  of  a  scheme  which,  ac- 
cording to  Smollett,  promised  no  commercial  advantages  of  importance, 
and  was  buoyed  up  by  nothing  but  the  folly  and  rapacity  of  individuals. 
He  says,  "  During  the  infatuation  produced,  luxury,  vice  and  profligacy 

*  The  restoration  of  peace  between  Great  Britain  and  Spain,  by  treaty  concluded 
in  January,  1720,  gave  an  additional  impulse  to  speculation  in  commerce,  foreign 
mines,  and  manufactures. 


70  History  of  the  Bank  of  England. 

increased  to  a  shocking  degree  of  extravagance.  The  adventurers,  intox- 
icated by  their  imaginary  wealth,  pampered  themselves  with  the  rarest 
dainties,  and  the  most  expensive  wines  that  could  be  imported  ;  they  pur- 
chased the  most  sumptuous  furniture,  equipage  and  apparel,  though  with- 
out taste  or  discernment ;  they  indulged  their  criminal  passions  to  the 
most  scandalous  excess  ;  their  discourse  was  the  language  of  pride,  inso- 
lence and  the  most  ridiculous  ostentation.  They  aflfccted  to  scoff  at 
religion  and  morality,  and  even  to  set  heaven  at  defiance." 

In  the  periodicals  of  the  time  the  course  of  the  fraud  may  almost  be 
traced.     At  first  gay  and  satirical,  we  read : 

"  In  London  stands  a  famous  pile, 

And  near  that  pile  an  alley, 
Where  merry  crowds  for  riches  toil, 

And  wisdom  stoops  to  folly ; 
Here  sad  and  joyful,  high  and  low, 

Court  fortune  for  her  graces  ; 
And  as  'she  smiles,  or  frowns,  they  show 

Their  gestures  and  grimaces. 
Here  stars  and  garters,  too,  appear, 

Among  our  lords  the  rabble ; 
To  buy  and  sell,  to  see  and  hear, 

The  jews  and  gentiles  squabble; 
Our  greatest  ladies  hither  come, 

And  ply  in  chariots  daily. 
Or  pawn  their  jewels  for  a  sura 

To  venture  in  the  alley ; 
Longheads  may  thrive  by  sober  rules. 

Because  they  think  and  drink  not ; 
But  headlongs  are  our  thriving  fools. 

Who  only  drink  and  think  not. 
What  need  have  we  of  Indian  wealth, 

Or  commerce  with  our  neighbors  ? 
Our  constitution  is  in  health, 

And  riches  croAvn  our  labors." 

Where  credulity  is  plentiful  promises  are  equally  so ;  where  men  de- 
sire money  they  appear  to  credit  any  falsehood,  however  monstrous,  pro- 
vided only  it  be  plausible ;  "  the  wish  is  father  to  the  thought,"  and 
while  they  imagine  they  are  cheating,  they  often  become  the  cheated. 
Exchange  Alley  was  thronged  with  the  duper  and  the  duped,  and  Corn- 
hill  was  impassable  for  fools  and  knaves.  Ballads  were  sung  about  the 
streets,  and  the  caricaturist  was  busy  in  his  legitimate  calling  of  satirizing 
the  folly  and  the  vices  of  the  people.  But  who  cares  for  caricatures 
when  money  is  to  be  made  ?  The  spirit  which  levels  rank  and  destroys 
distinctions — which  ruins  virtue  and  engenders  vice — that  fierce  thirst 
which  "  grows  by  what  it  feeds  on,"  continued  to  spread.  The  South 
Sea  Company  was  a  legitimate  trade  to  some  of  the  speculations  which 
arose. 

Schemes  were  proposed  which  would  have  been  extravagant  in  1825, 
and  which  stamped  the  minds  of  those  who  entertained  them  with  what 
may  be  truly  termed  a  commercial  lunacy.  One  was  for  the  "  discovery 
of  perpetual  motion."  Another  for  subscribing  two  millions  and  a  half 
to  "  a  promising  design  hereafter  to  he  promulgated.^''     A  third  was  a 


Neio  Companies — Epigram.  71 

"Company  for  carrying  on  an  undertaking  of  great  advantage,  but 
nobody  to  know  what  it  is ;  every  subscriber  who  deposits  £2  per  sbare 
to  be  entitled  to  £100  per  annum."  Even  this  insolent  attempt  on  the 
credulity  of  the  nation  succeeded ;  and,  when  the  arch-rogue  opened  his 
shop,  the  house  was  beset  with  applicants.  In  five  hours  £2,000  were  de- 
posited in  the  hands  of  the  projector,  and  from  that  day  he  ceased  to  be 
heard  of  in  England.  Projects  like  these  enlisted  the  lowest  with  the 
highest.  On  some  sixpence,  and  on  others  one  shilling,  per  cent.  Avas 
paid;  and,  as  no  capital  was  required,  the  comparative  beggar  might  in- 
dulge in  the  same  adventurous  gambling,  and  enjoy  the  same  bright  cas- 
tles in  the  air  which  marked  the  dreams  of  the  rich  and  the  great.  Some 
came  so  low  as  to  ask  only  one  shilling  deposit  on  every  thousand  pounds. 
Persons  of  quality,  of  both  sexes,  were  engaged  in  these.  Avarice  tri- 
umphed over  dignity;  gentlemen  met  their  brokers  at  taverns;  ladies  at 
their  milliner's  shops.  The  English  historian  says,  "All  distinctions  of 
party,  religion,  sex,  character  and  circumstance  were  swallowed  up  in 
this  universal  concern,  or  in  some  such  pecuniary  project.  Exchange  Al- 
ley was  filled  with  a  strange  concourse  of  statesmen  and  clergymen, 
churchmen  and  dissenters,  Whigs  and  Tories,  physicians,  lawyers,  trades- 
men and  even  multitudes  of  females.  All  other  professions  and  employ- 
ments were  utterly  rejected;  the  people's  attention  wholly  engrossed  by 
this  and  other  chimerical  schemes,  which  were  known  by  the  denomina- 
tion of  bubbles. 

Among  the  schemes  advertised  in  derision  of  the  propensity  of  the 
day,  was  one  "  for  making  butter  from  beech  trees ;"  another  for  "  an  en- 
gine to  remove  the  South  Sea  House  to  Moorfields;"  a  third  "  for  teach- 
ing wise  men  to  cast  nativities."  The  clerks  of  the  South  Sea  Company 
found  it  a  prosperous  period.  As  the  lapse  of  a  day  might  make  100 
per  cent,  difference,  a  £20  note  was  frequently  given  to  expedite  the 
transaction.  These  perquisites  were  so  great  that  the  projectors  wore 
lace  dresses,  and  answered,  when  remonstrated  with,  that,  "  if  they  did 
not  put  gold  upon  their  clothes,  they  could  not  make  away  with  half 
their  earnings." 

The  following  is  selected  from  among  the  many  epigrams  of  the  period, 
to  prove  that  a  few  yet  retained  their  senses  : 

"  A  wise  man  laughed  to  see  an  ass 
Eat  thistles  and  neglect  good  grass ; 
But  had  the  sage  beheld  the  folly 
Of  late  transacted  in  Change  Alley, 
He  might  have  seen  worse  asses  there 
Give  solid  gold  for  empty  air  !" 

But  while  the  speculator  "  put  money  in  his  purse,"  he  little  heeded 
the  admonitions  of  the  satirist.  It  is  evident,  from  the  following,  that 
there  were  some  who  shrewdly  guessed  the  advantages  which  the  direct- 
ors proposed  taking  to  themselves  : 

"  As  fishes  on  each  other  prey, 

The  great  ones  swallowing  up  the  small, 
So  fares  it  in  the  southern  sea, 
But  whale-directors  eat  up  all. 


72  History  of  the  Bank  of  England. 

"  Oh  !  would  these  patriots  be  so  kind, 
Here  in  the  deep  to  wash  their  hands  ; 
Then,  like  Pactolus,  we  should  find 
The  sea  indeed  had  golden  sands. 

"  The  nation,  too,  too  late  will  find, 

Computing  all  their  cost  and  trouble. 
Directors  promises  but  wind. 

South  Sea,  at  best,  a  mighty  bubble." 

New  companies  started  up  every  day  under  tlie  countenance  of  the 
prime  nobility.  The  Prince  of  Wales  was  constituted  governor  of  the 
Welsh  Copper  Company ;  (by  which  he  made  sixty  thousand  pounds, 
and  then  withdrew  his  name  ;)  the  Duke  of  Bridgewater  formed  an  asso- 
ciation for  building  houses  in  London  and  Westminster ;  and  the  Duke 
of  Chandos  appeared  at  the  head  of  the  York  Buildings  Company. 

Another  ingenious  fraud  consisted  of  the  "  Globe  permits,"  square  bits 
of  playing-card,  on  which  Avcre  impressed  in  wax  the  Globe  tavern,  and 
inscribed  on  them  "  sail-cloth  permits."  These  cards  were  merely  per- 
missions to  subscribe  to  some  future  sail-cloth  company,  and  were  cur- 
rently sold  at  sixty  guineas  each.  The  confusion  and  crowd  were  so 
great  that  the  same  shares  were  sometimes  sold  at  the  same  moment  £10 
higher  in  one  part  of  the  alley  than  another. 

It  is  impossible  to  peruse  the  contemporary  papers  without  surprise. 
The  absurdity  seems  too  glaring  to  excite  any  thing  but  ridicule.  The 
London  Journal  of  the  11th  of  June  says:  "The  hurry  of  our  stock- 
jobbing bubblers  has  been  so  great  this  week  that  it  has  exceeded  all  that 
was  ever  known.  There  has  been  nothing  but  running  about  from  one 
coffee-house  to  another,  and  from  one  tavern  to  another,  to  subscribe,  with- 
out examining  ivhat  the  proposaU  were.  The  general  cry  has  been,  *  For 
Q — 's  sake  let  us  but  subscribe  to  something,  we  donH  care  what  it  is.^  So 
that,  in  short,  many  have  taken  them  at  their  words,  and  entered  them 
adventurers  in  some  of  the  grossest  cheats  and  improbable  undertakings 
that  ever  the  world  heard  of;  and  yet,  by  all  these,  the  projectors  have 
got  money,  and  have  had  their  subscriptions  full  as  soon  as  desired." 

Mr.  Mackay,  in  his  "  Memoirs  of  Popular  Delusions,"  says :  "  Besides 
these  bubbles,  many  others  sprung  up  daily,  in  spite  of  the  condemnation 
of  the  government  and  the  ridicule  of  the  still  sane  portion  of  the  public. 
The  print-shops  teemed  with  caricatures,  and  the  newspapers  with  epi- 
grams and  satires,  upon  the  prevalent  folly.  An  ingenious  card-maker 
published  a  pack  of  South  Sea  playing  cards,  which  are  now  extremely 
rare,  each  card  containing,  besides  the  usual  figures,  of  a  very  small  size, 
in  one  corner,  a  caricature  of  a  bubble  company,  with  appropriate  verses 
beneath.  One  of  the  most  famous  bubbles  was  '  Buckle's  Machine  Com- 
pany,' for  discharging  round  and  square  cannon  balls  and  bullets,  and 
making  a  total  revolution  in  the  art  of  war.  Its  pretensions  to  public 
favor  were  thus  summed  up  in  the  eight  of  spades : 

'  A  rare  invention  to  destroy  the  crowd 
Of  fools  at  home,  instead  of  fools  abroad. 
Fear  not,  my  friends,  this  terrible  machine, 
They're  only  wounded  who  have  shares  therein.' 


South  Sea  Cards — Assurance  Companies.  73 

The  nine  of  hearts  was  a  caricature  of  the  English  Copper  and  Brass 
Company,  with  the  following  epigram  : 

'  The  headlong  fool  that  wants  to  be  a  swopper 
Of  gold  and  silver  coin  for  English  copper, 
May,  in  Change  Alley,  prove  himself  an  ass, 
And  give  rich  metal  for  adulterate  brass.' 

The  eight  of  diamonds  celebrated  the  company  for  the  colonization  of 
Acadia,  with  this  doggrel.  The  reader  cannot  fail  to  admire  the  ease 
and  elegance  of  the  rhyme  : 

'  He  that  is  rich  and  wants  to  fool  away  • 

A  good  round  sum  in  North  America, 
Let  him  subscribe  himself  a  headlong  sharer, 
And  asses'  ears  shall  honor  him  or  bearer.' 

And  in  a  similar  style  every  card  of  the  pack  exposed  some  knavish 
scheme  and  ridiculed  the  persons  who  were  its  dupes.  It  was  computed 
that  the  total  amount  of  the  suras  proposed  for  carrying  on  these  projects 
was  upwards  of  three  hundred  millions  sterling,  a  sum  so  immense  that 
it  exceeded  the  value  of  all  the  lands  in  England  at  twenty  years'  pur- 
chase." 

It  would  be  curious,  were  it  practicable,  to  know  the  feelings  of  the 
directors  of  the  Bank  of  England  during  this  important  period.  It  seems 
almost  impossible  for  them  to  have  escaped  the  universal  fever.  A  golden 
prize  appeared  in  the  possession,  and  human  nature  must  have  repined  at 
the  success  of  their  opponents.  During  a  time  so  full  of  excitement  it 
was  almost  impossible  to  argue  calmly  ;  and  they  probably  looked  upon 
the  gigantic  success  of  the  rival  company  as  calculated  to  injure  their  own 
corporation,  if  not  utterly  to  destroy  it.  But  whatever  their  ideas  were, 
the  revulsion  which  followed  must  have  more  than  compensated  for  them 
by  their  entire  security,  when  the  remainder  of  London  was  one  great 
commercial  wreck.  Out  of  this  universal  frenzy  arose  two  great  corpo- 
rate bodies.  The  Royal  Exchange  and  London  Assurance  Companies 
owe  their  origin  to  this  speculative  period.  The  civil  list  was  in  arrears, 
and  the  heads  of  the  above  companies  offered  £600,000,  on  condition 
of  obtaining  charters.  There  is  rarely  great  evil  without  accompanying 
good  ;  and  these  bodies,  which  have  tended  to  so  much  individual  ad- 
vantage, the  benefits  of  which  have  been  moral  as  well  as  pecuniary ; 
which  have  provided  for  so  many  sorrows  and  dried  so  many  tears,  as 
much  by  their  own  transactions  as  by  the  great  impulse  afforded  to  the 
principle  of  life  assurances,  have,  in  some  respects,  atoned  for  the  despair 
which  followed  the  "  delusion  and  the  drunkenness"  described.*  The 
evil  was  confined  to  a  few  years ;  the  good  will  be  spread  over  centuries. 
While  the  excitement  was  at  its  height,  the  Royal  Exchange  and  London 
Assurance  shares  were  respectively  forced  up  to  £250  and  £l75.  East 
India  stock,  under  the  same  influence,  rose  to  445,  and  bank  stock  to  2G0 
per  cent. 

But  the  South  Sea  Company  grew  jealous  of  their  rivals,  and  com- 

*  la  April,  1720,  appeared  the  royal  proclamation  against  "  TTie  Hell-Fire  Club." 


74  History  of  the  Bank  of  England. 

menccd  legal  proceedings  against  some  of  the  companies.  This  brought 
the  whole  affair  to  an  issue,  and  a  general  panic  seized  the  conductors  of 
the  bubbles.  The  "York  buildings"  fell  at  once  100  per  cent.;  and  in 
two  days,  this  company,  with  some  others  which  were  specially  named, 
had  no  buyers  at  any  price  whatever.  The  more  bare-faced  bubbles  im- 
mediately shrunk  to  their  natural  nothingness.  The  various  offices  were 
shut  up  ;  the  contractors  disappeared ;  and  Change  Alley  was  a  com- 
parative wilderness.  When  the  law  proceedings  began.  South  Sea  stock 
was  850  per  cent.,  and  from  that  time  it  rapidly  declined,  until,  on  the 
29tli  September,  the  following  month,  it  fell  to  175. 

The  directors  grew  alarmed.  In  vain  they  promised  that  the  Christ- 
mas dividend  should  be  at  the  rate  of  60  per  cent.,  and  that  50  per  cent, 
should  be  guaranteed  for  the  following  twelve  years.  The  public  refused 
to  believe,  and  men  ran  to  and  fro,  alarm  and  terror  in  their  countenance, 
their  imaginations  filled  with  dismal  pictures  of  calamity.  The  fear  was 
in  proportion  to  the  hope  ;  and  no  one  knew  where  the  evil  would  cease. 
Thousands  of  families  were  reduced  to  beggary.  Many  were  not  able  to 
withstand  the  shock,  but  died  broken-hearted.  Others  withdrew  to  re- 
mote parts  of  the  world,  and  perished  in  exile.  The  very  name  of  a 
South  Sea  director  was  an  abomination,*  nor  could  one  of  them  appear 
in  the  streets  without  danger  of  being  insulted. 

In  the  London  Journal  we  read,  "  There  appeared  the  utmost  consterna- 
tion in  Change  Alley,  the  day  the  act  for  suppressing  them  took  place, 
which,  because  of  the  terror  and  confusion  it  struck  among  those  brethren 
in  iniquit)^,  they  called  the  day  of  judgment.  Many  of  those  who  have 
been  most  assiduous  in  drawing  other  poor  wretches  into  their  ruin,  have, 
besides  their  wealth,  acquired  an  infamy  they  can  never  wipe  off;  they 
being  followed  with  the  reproaches,  threats  and  bitterest  curses  of  the 
poor  people  they  have  deluded  to  their  destruction."  The  Weekly 
Packet  says  of  the  schemers,  "  they  have  been  used  to  such  dishonest 
ways  of  living,  and  hardly  will  take  up  with  any  course  of  life  that  is  not 
so ;  insomuch  that  it  is  feared  many  of  them  will  go  out  marauding  ;  then 
stand  clear  the  Bristol  mailP 

Public  credit  sustained  a  tremendous  shock.  Many  bankers  and  gold- 
smiths, who  had  lent  money  on  the  security  of  the  stock,  were  compelled 
to  stop  payment  through  its  depreciation  ;  and  the  sword-blade  associa- 
tion, hitherto  the  chief  cashiers  of  the  company,  followed  their  example. 
There  was  but  one  hope  left  to  the  nation.  The  directors  of  the  Bank  of 
England,  always  applied  to  in  distress,  and  not  always  remembered  in 
prosperity,  were  persuaded,  at  the  instance  of  Sir  Robert  Walpole,  to 
come  forward  during  the  early  part  of  the  panic.  A  general  court  was 
held,  at  which  the  governor  and  directors  were  empowered,  without  a  dis- 
sentient voice,  to  agree  with  the  South  Sea  Company  to  circulate  their 
bonds,  in  hopes  of  sustaining  the  credit  of  the  country.  A  memorandum 
was  hastily  drawn  up,  to  be  the  foundation  of  a  future  agreement,  by 
which  the  bank  undertook  to  circulate  £3,500,000  at  400  per  cent.    The 

*  It  is  a  curious  feature  in  the  history  of  the  times,  that  Law's  Mississippi  scheme 
and  the  South  Sea  scheme,  both  conceived  about  the  same  time,  exploded  within  a 
few  days  of  each  other.  The  first  deluged  France  with  bankruptcy,  and  the  latter 
spread  "insolvency  throughout  England. 


Parliamentary  Inquiry.  Y5 

mania  which  affected  all  England  must  have  seized  partially  on  the  pro- 
prietary, or  so  high  a  rate  would  never  have  been  allowed.  Fortunately 
the  memorandum  had  not  been  legally  ratified.  The  first  efi'ect  of  this 
arrangement  was  to  support  the  price  of  the  stock.  Books  were  opened 
at  the  bank  to  receive  subscriptions,  and  large  sums  were  brought  in. 
The  bankruptcy  of  some  large  companies,  however,  produced  a  run  upon 
the  bank,  and  the  directors  renounced  the  agreement.  The  losing  party 
commenced  legal  proceedings,  but  a  hundred  reasons  prevented  a  con- 
tinuance. The  fear  of  publicity  ;  the  knowledge  of  their  own  nefarious 
transactions ;  the  conviction  that  they  had  been  and  were  acting  dishon- 
estly ;  the  influence  of  those  parties  in  power  who  had  profited  by  the 
rascality  of  the  transaction  ;  the  certainty  that  every  thing  would  be 
brought  to  light,  and  that  they  could  not  (to  use  an  expressive  but 
homely  phrase)  "  go  into  court  with  clean  hands,"  wrought  upon  the 
directors  of  the  South  Sea  Company  ;  and  legal  proceedings  were  quickly 
abandoned. 

The  managers  of  the  Bank  of  England  retained  the  even  tenor  of  their 
course.  They  had  wrought  no  evil,  they  feared  no  reverses.  They  had 
not  entered  the  market  to  raise  or  depress  the  stock ;  and,  without 
alarm,  they  saw  it  daily  fall  in  value.  The  South  Sea  Company  had 
commenced  into  a  distinct  and  positive  rivalry  with  them.  They  had 
sought  to  obtain  from  government  those  advantages  which  had  been  paid 
for  at  a  high  rate  by  their  competitors,  and  which  could  only  be  procured 
by  their  injury.  If,  therefore,  a  certain  degree  of  satisfaction  pervaded  the 
minds  of  the  bank  directors  at  the  downfall  of  their  rivals,  it  reflects  a 
higher  degree  of  credit  on  them,  that,  setting  aside  the  littleness  of  jeal- 
ousy, they  came  promptly  forward  to  render  all  the  assistance  in  their 
power.  When  they  found  the  terms,  hastily  named,  were  more  in  accord- 
ance with  the  inordinate  ambition  of  the  South  Sea  directors,  than  with 
the  intrinsic  worth  of  the  stock,  it  was  a  duty  which  they  owed  to  them- 
selves, to  their  proprietary,  and  to  the  nation,  to  abandon  the  connection 
at  once,  rather  than  add  to  the  misery  of  the  people,  by  being  engulfed 
in  the  whirlpool.  "  The  overbearing  insolence  of  ignorant  men,"  says 
Dr.  Mackay,  "  who  had  risen  to  sudden  wealth  by  successful  gambling, 
made  men  of  true  gentility  of  mind  and  manners  blush  that  gold  should 
have  power  to  raise  the  unworthy  in  the  scale  of  society.  The  haughti- 
ness of  some  of  these  "cyphering  cits,"  as  they  were  termed  by  Sir 
Richard  Steele,  was  remembered  against  them  in  the  day  of  their  ad- 
versity. In  the  parliamentary  inquiry,  many  of  the  directors  suffered 
more  for  their  insolence  than  their  peculation.  One  of  them,  who,  in  the 
full  blown  pride  of  an  ignorant  rich  man,  had  said  that  he  would  feed 
his  horse  upon  gold,  was  reduced  almost  to  bread  and  water  for  himself; 
every  haughty  look,  every  overbearing  speech,  was  set  down,  and  repaid 
them  a  hundred  fold  in  humiliation."  One  of  the  members  made  a  mo- 
tion concerning  this  man,  whose  name  was  Grigsby,  to  the  following 
effect :  "  That,  since  that  upstart  had  been  so  prodigally  vain  as  to  bid  his 
coachman  feed  his  horses  with  gold,  no  doubt  he  could  feed  on  it  himself; 
and,  therefore,  he  moved  that  he  might  be  allowed  as  much  gold  as  he 
could  eat,  and  the  rest  of  his  estate  go  towards  the  relief  of  the  sufferers." 

During  this  period  the  king  had  been  in  Germany;  but  the  confusion 


76  History  of  the  Bank  of  England. 

of  the  nation  compelled  liim  to  return,  and  on  the  11th  of  November  he 
arrived  in  England.  Many  expedients  were  started,  when  the  bank,  fear- 
ful of  compromising  their  own  safety,  withdrew  from  the  field.  Amongst 
others,  an  engraftment  of  nine  millions  of  the  South  Sea  stock  into  bank, 
and  nine  into  East  India  stock.  Warm  and  varied  debates  occurred  at 
the  courts ;  and  the  proposition,  though  at  last  agreed  to,  and  confirmed 
by  act  of  Parliament,  was  afterwards  abandoned.  In  the  mean  time,  the 
most  infamous  transactions  were  discovered  ;  and  parliamentary  language 
was  not  much  regarded  in  the  debates.  A  few  of  the  speeches  indulged 
in  by  the  senators  strike  somewhat  curiously  on  the  modern  ear. 

The  Bishop  of  Rochester  said,  "the  scheme  was  like  a  pestilence."  The 
Duke  of  Wharton  added,  that  "  he  would  give  up  his  dearest  friend  if 
engaged  in  the  project."  Lord  Stanhope  thought  "  every  farthing  of  the 
criminals'  property  ought  to  be  confiscated  ;"  and  Lord  Molesworth, 
with  a  fine  philanthropic  spirit,  remarked  that  "the  directors  ought  to  be 
tied  in  a  sack,  and  thrown  into  the  Thames."  Mr.  Shippen,  the  Jaco- 
bite member,  said  "he  was  glad  to  see  a  British  House  of  Commons  re- 
suming its  pristine  vigor  ;  and  that  there  were  other  men,  in  high  station, 
who  were  not  less  guilty  than  the  directors."  Mr,  Craggs,  Secretary  of 
State,  against  whom  this  inuendo  was  directed,  arose,  and  ofiered  to  de- 
monstrate his  innocence  by  fighting  any  man  in  or  out  of  the  house. 
Lord  Molesworth  "  wondered  at  his  boldness ;  but  though  he  was  past 
sixty,  there  were  plenty  of  young  men  who  would  not  be  afraid  to  look 
Mr.  Craggs  in  the  face."  Vociferous  cries  of  order  arose  ;  Mr.  Craggs 
was  compelled  to  apologize  ;  and  a  secret  committee  appointed  to  inquire 
into  the  transactions  of  the  South  Sea  Company. 

It  was  found  impossible  to  please  the  losers,  who  absolutely  besieged 
the  House  of  Commons.  On  one  occasion  the  tumult  was  so  great  that 
the  members  could  not  proceed  with  the  ordinary  business.  The  riot  act 
was  read ;  and  one  from  the  crowd  called  out,  with  the  bitter  boldness  of 
a  ruined  man,  "  You  pick  our  pockets,  and  then  imprison  us  for  com- 
plaining." The  governors,  directors  and  officers  of  the  company  were 
brought  before  the  bar  of  the  House  of  Commons.  The  treasurer,  who 
was  deeply  implicated,  absconded ;  and,  fear  being  entertained  that  the 
directors  might  follow  his  example,  a  proclamation  was  issued  that  none 
of  them  should  leave  the  kingdom. 

General  Ross,  with  more  energy  than  elegance,  informed  the  house  a 
train  of  the  deepest  villainy  that  hell  ever  invented  to  ruin  a  nation  had 
been  discovered.  Bribery  had  been  effected  in  procuring  the  act  to  be 
passed  ;  and  all  officers  of  this  company  holding  government  situations 
were  immediately  removed  from  them.  It  had,  indeed,  been  a  delusion 
from  beginning  to  end.  A  fictitious  stock,  amounting  to  £574,000,  had 
been  created,  and  distributed  among  secretaries  of  state,  chancellors  of 
the  exchequer,  duchesses,  earls  and  countesses.  The  conduct  of  Mr. 
AisLABiE,  Chancellor  of  the  Exchequer,  was  more  infamous  than  that  of 
any  other,  as  he  had  advised  the  company  to  increase  their  second  sub- 
scription half  a  million,  without  any  other  authority  than  their  own,  and 
appears  to  have  benefited  to  the  amount  of  £800,000.  His  punishment 
rapidly  and  deservedly  followed  his  crime.  He  was  ignominiously  ex- 
pelled the  house,  sent  to  the  Tower,  restrained  for  a  year  from  leaving 


Punishment  of  the  Peculators.  "      77 

the  kingdom,  and  ordered  to  make  a  correct  account  of  his  estate  for  the 
benefit  of  the  sufferers.  Dwellings  were  illuminated  in  testimony  of  de- 
light at  the  sentence ;  a  mob  assembled  on  Tower  Hill  to  witness  his 
degradation  ;  bonfires  were  kindled  in  all  parts  of  the  city,  and  London 
wore  the  appearance  of  a  great  festivity.  The  hand  of  Providence  was 
on  the  betrayers  of  their  country.  Several  members  of  the  lower  house, 
directors  of  the  company,  were  expelled.  Mr.  Secretary  Craggs  and  his 
father  died  while  proceedings  were  pending,  the  latter  leaving  a  million 
and  a  half  for  those  he  had  assisted  to  ruin.  The  legislature  restrained 
the  persons  of  the  directors,  and  marked  their  characters  with  ignominy. 
An  impartial  tribunal  was  scarcely  to  be  expected.  Those  who  had  lost 
money  were  revengeful.  Those  who  had  gained  endeavored  to  hide  it 
under  the  appearance  of  zeal.  The  devices  of  party,  the  application  in 
the  name  of  friendship,  the  appeal  under  the  plea  of  kindred,  were  all 
used  to  shield  the  guilty,  and,  in  some  instances,  were  successful  in  pro- 
curing a  small  majority.  The  more  violent  recommended  hanging;  and 
one  of  the  members  most  pathetically  lamented  that  "  after  all  there  was 
nobody's  blood  shed  !" 

The  great  historian  of  the  "  Decline  and  Fall  of  the  Roman  Empire" 
complains,  "  Instead  of'  the  calm  solemnity  of  a  judicial  inquiry,  the  for- 
tune and  honor  of  thirty-three  Englishmen  were  made  the  topics  of  hasty 
conversation,  the  sport  of  a  lawless  majority ;  and  the  basest  member  of 
the  committee,  by  a  malicious  word  or  silent  vote,  might  indulge  his 
general  spleen  or  personal  animosity.  Injury  was  aggravated  by  insult, 
and  insult  was  embittered  by  pleasantry.  Allowances  of  £20  or  one  shil- 
ling were  facetiously  moved.  A  vague  report  that  a  director  had  former- 
ly been  concerned  in  another  project,  by  whicb  some  unknown  persons 
had  lost  their  money,  was  admitted  as  a  proof  of  his  actual  guilt.  One 
man  was  ruined  because  he  was  grown  so  proud  that,  one  day,  at  the 
treasury,  he  had  refused  a  civil  answer  to  persons  much  above  him.  AH 
were  condemned,  absent  and  unheard,  in  arbitrary  fines  and  forfeitures, 
which  swept  away  the  greatest  part  of  their  substance." 

The  pens  which  had  been  employed  in  prophesying  mischief,  were  not 
backward  in  affecting  commiseration  for  the  sufferers.  The  following  is 
another,  and  tbe  last  specimen  of  the  literature  of  the  South  Sea  bubble  ; 

"  Behold  a  poor  dejected  wretch, 

Who  kept  a  South  Sea  coach  of  late, 
But  now  is  glad  to  humbly  catch 
A  penny  at  the  prison  gate. 

"  'Tis  strange  one  set  of  knaves  should  sour 
A  nation  famed  for  wealth  and  wit ; 
But  stranger  still  that  men  in  power 
Should  give  a  sanction  to  the  cheat. 

"  Fools  lost  when  the  directors  won, 
But  now  the  poor  directors  lose  ; 
And  where  the  South  Sea  stock  will  run^ 
Old  Nick,  the  first  projector,  knows." 

The  most  difficult  process  was  yet  to  come ;  it  was  easier  to  punisb 
the  delinquents  than  to  relieve  the  sufferers.     Through  the  abilities  of 
6 


78  History  of  the  Bank  of  England. 

Mr.  Robert  Walpole,  however,  tliis  was  adjusted.  It  was  partially  done 
by  giving  to  the  public  seven  millions  of  the  money  which  belonged  to 
the  company  in  their  corporate  capacity,  being  the  profits  arising  from 
the  delusion.  Of  their  capital  stock  a  sufficient  sum  to  pay  the  claimants 
£33  6s.  8d.  per  cent.,  amounting  to  £8,900,000,  was  taken ;  and  this 
was  necessarily  a  great  relief.  Of  a  debt  of  eleven  millions  sterling,  ad- 
vanced by  the  company  to  the  public  on  stock,  the  latter  were  relieved, 
on  paying  ten  per  cent,  on  it.  Thus  the  company  would  have  received 
£1,100,000  instead  of  eleven  millions,  had  all  consented  to  the  agree- 
ment, but  many  debtors  refused  to  make  any  payment  whatever. 

Who  can  read  these  things  and  not  mourn  ?  They  are  not  asked  to 
deplore  rapid  reverses ;  they  are  not  called  upon  to  grieve  for  the  rich 
man,  made  suddenly  poor,  for  luxury  turned  to  want,  or  the  insolent 
man  made  humble  ;  but  they  are  called  upon  to  grieve  for  our  common 
humanity.  For  that  melancholy  madness  which  crushed  all  good  feel- 
ing, which  made  the  poor  man  insane  from  the  hope  of  riches,  and.  the 
rich  man  mad  from  the  hope  of  extravagant  wealth  ;  which  trampled 
alike  upon  human  ties  and  natural  desires,  and  embarked  all  England  in 
a  scheme  destructive  of  moral  feeling  and  national  strength. 

Thus  ended  this  delusion,  alike  memorable  and  melancholy.  There 
are  no  fine  deeds  standing  prominently  forward  to  redeem  it ;  there  are 
no  noble  acts  which,  while  we  deplore  the  cause,  make  us  admire  the 
effect ;  there  is  no  unselfish  sacrifice  tending  to  make  us  proud  of  human 
nature.  The  prospect  is  one  wide  waste  of  degradation  ;  there  is  nothing 
to  sanctify,  there  is  nothing  to  redeem  it. 

The  course  of  this  history  may  lead  to  new  instances  of  intense  thirst 
for  gold.  Speculative  epochs  may  again  occur ;  the  events  of  the  past 
may  re-£^ppear  in  the  future.  Legitimate  business  may  again  be  deserted 
for  unlawful  callings,  and  the  history  of  that  which  is  gone  cease  to  be 
received  as  a  warning.  Yet  will  the  great  delusion  of  this  period  stand 
alone  in  its  infamy,  its  disgrace  and  its  misery.  And  though  we  dare 
not  venture  to  hope  that  the  spirit  which  shook  the  country  to  its  centre 
has  passed  away — for  nations,  like  individuals,  are  liable  to  their  fevers 
and  their  crimes — yet  let  it  be  hoped  that,  if  witnessed  again  in  Eng- 
land, a  prince  of  the  blood  may  not  sanction  it ;  an  officer  of  State  profit 
by  it ;  members  of  the  Senate  be  bribed  with  it ;  peers  of  the  realm  be 
disgraced  through  it ;  or  a  chancellor  of  the  exchequer  be  denounced, 
degraded  and  dishonored  in  its  discovery. 

The  following  copy  of  an  agreement,  entered  into  with  the  Duke  of 
Rutland,  will  serve  to  show  the  form  of  compact :  "  I  promise  to  pay  to 
the  Duke  of  Rutland  £10,000,  upon  his  transferring  to  me,  or  my  order, 
V,000  capital  South  Sea  stock,  some  time  on  or  before  the  shutting  of 
the  company's  books  for  the  next  Christmas  dividend." 

More  than  two  millions  were  confiscated.*  The  following  deductions 
are  rather  in  proportion  to  the  delinquency  of  the  speculators  than  to 
the  magnitude  of  their  estates  : 


*  For  copious  review  of  this  scheme,  see  "  Mackay's  Memoirs  of  Extraordinary 
Delusions,"  London,  1852.     "  Encyclopedia  Britannica,"  1860. 


Confiscation.  79 

PERSONS.  ESTATES.  ALLOWANCES. 

Sir  John  Fellows,  Sub.  Gov., £243,096     Os.  6d.  . .  £10,000 

Charles  Joye,  Esq.,  Dep.  Gov 40,105     2     0  . .  5,000 

Mr.  Astell, 27,750  19     8f  ..  5,000 

Sir  John  Blunt, 183,349  10     8J  ..  1,000 

Sir  Lawrence  Blackwell, 83,529  17  11  ..  10,000 

Sir  Robert  Chaplin, 45,875  14     5  . .  10,000 

Sir  William  Chapman, 39,161     6     8i  ..  10,000 

Mr.  Chester, 140,372  15     6  ..  10,000 

Mr.  Child,* 52,437  19     1  ..  10,000 

Mr.  Eyles, 34,329  16     7  ..  20,000 

Mr.  Gibbon, 106,543     5     6  ..  10,000 

Mr.  Hawes, 40,031     0     2|  . .  31 

Sir  Theodore  Janssen, 243,244     3  11  . .  50,000 

Sir  John  Lambert, 72,508     1     5  . .  5,000 

Mr.  Read 117,297  16     0  .,  10,000 

Mr.  Surman,  Dep.  Cash., 121,32110     0  ..  5,000 

*  "  Among  the  earliest  goldsmiths  whose  business  was  subsequently  merged  into 
that  of  banking,  as  at  present  conducted,  was  Mr.  Francis  Child,  citizen  and  gold- 
smith, who  established  himself  in  Fleet-street,  at  the  east  corner  of  Temjjle  Bar, 
and  on  the  same  spot  where  the  business  is  still  carried  on.  He  lived  to  a  great 
age,  and  was  a  person  of  large  fortune  and  a  most  respectable  character.  The  next 
in  point  of  antiquity  was  the  present  house  of  STE.\nAN,  Paul  &  Co.  This  bank  was 
originally  founded  by  Mr.  Jeremiah  Snow,  who  carried  on  business  as  a  goldsmith, 
or  what  in  modern  phraseology  is  better  known  by  the  name  of  pawnbroker.  His 
name  appears  among  the  goldsmiths  or  bankers  who  were  robbed  by  Ch.arles  II. 
By  the  kindness  of  the  gentleman  at  present  carrying  on  the  business  of  the  bank, 
we  have  been  favored  with  the  privilege  of  inspecting  the  books  of  the  bank  so  early 
as  the  year  1672.  They  show  that  the  nobility  of  the  land  were  in  the  habit  of  fre- 
quenting their  shop,  and  borrowing  money  on  the  deposit  of  various  gold  and  silver 
articles,  such  as  gold  and  silver  tankards,  golden  thimbles,  and  other  valuables  of  a 
very  miscellaneous  and  sometimes  comical  description. 

"  Not  many  years  after  the  London  bankers  had  ceased  to  issue  notes,  the  incon- 
venience of  making  all  payments  in  Bank  of  England  notes  and  gold  had  become 
so  great  that  some  change  was  indispensably  necessary ;  when  the  plan  of  adjust- 
ing each  other's  daily  payments  by  an  interchange  of  liabilities  was  adopted  as  the 
best  mode  of  economizing  the  use  of  money. 

"  At  first  the  system  adopted  was  of  the  most  primitive  kind,  and  certainly  not 
the  safest.  The  clerks  of  the  various  banking-houses  used  to  perform  the  operation 
of  exchanges  at  the  corners  of  streets  and  on  the  top  of  a  post.  They  then  met,  by 
appointment,  at  a  public-house  ;  but,  from  the  insecurity  of  these  arrangements,  it 
was  at  last  thought  best  that  the  principal  city  bankers  should  rent  a  house  near 
the  old  post-office,  in  Lombard-street.     This  house  was  called  the  Clearing-House. 

"  The  bearing  of  devices  over  the  doors  of  shops,  and  other  places  of  business, 
was  a  very  common  pi-actice  before  the  introduction  of  the  plan  of  numbering  the 
houses,  which  did  not  take  place  till  about  the  year  1770. 

"  The  sign  of  the  house  in  Bread-street,  where  Milton's  father  resided,  was  a 
spread  eagle,  which  appears  to  have  been  the  arms  of  that  family. 

"  Remains  of  this  custom  are  still  to  be  observed  in  several  parts  of  the  metropo- 
lis ;  and,  in  reference  to  that  particular  vocation  which  forms  the  subject  of  our 
pages,  the  reader  is  informed  that  Messrs.  Hoares,  the  bankers,  in  Fleet-street,  re- 
tain to  this  day  over  the  door  the  symbol  of  a  leather  bottle,  gilt ;  and  the  same 
was  also  represented  on  their  notes  which  they  formerly  issued. 

"  Messrs.  Gostlings  also  retain  their  sign  of  three  squirrels,  and  Strahan,  Paul 
&  Co.,  the  sign  of  the  golden  anchor. — Laivsotis  History  of  Banking. 


80  History  of  the  Bank  of  England. 


CHAPTER    IX. 

PURCHASE    OF      SOUTH    SEA     ANNUITIES INCREASED     CAPITAL COITMENCEMENT     OF    THE 

REST CONSPIRACY     AND      HUN     UPON     THE    BANK CONFIDENCE     RESTORKD ADVANCES 

TO    GOVERNMENT NEW    BUILDING ORIGIN     OF    POST    BILLS NEW    CHARTER INVASION 

OF     1745 RUN     UPON     THE     BANK EXPEDIENT     TO     MEET     IT ATTEMPT     TO     INJURE 

CREDIT ASSISTANCE    TO    GOVERNMENT. 

In  1V22,  the  South  Sea  Company  were  allowed  to  sell  £200,000  gov- 
ernment annuities,  and  the  Bank  of  England  took  the  whole  at  twenty 
years'  purchase,  at  a  price  equal  to  par.  To  meet  the  payment,  amount- 
ing to  four  millions,  their  corporate  capital  was  increased  £3,400,000,  by 
£3,389,830  being  subscribed  for  at  118  per  cent.  By  this  transaction 
the  bank  made  a  profit  of  £610,169,  and  the  capital  amounted  to 
£8,959,995.  This  year  may  be  regarded  as  somewhat  memorable.*  In 
all  commercial  bodies,  a  reserve  fund,  in  proportion  to  the  importance  of 
the  partnership,  is  desirable.  Unexpected  liabilities  and  losses  must  fre- 
quently take  place,  and  periods  of  difficulty,  demanding  extensive  capi- 
tal, must  occasionally  arise.  The  dividends  of  the  corporation  had 
hitherto  varied  considerably,  as  extra  losses  could  only  be  met  by  decreas- 
ing the  interest.  If  such  claims  occurred  in  the  earlier  part  of  the  half- 
year,  it  is  probable  that  they  were  only  to  be  met  by  disposing  of  valu- 
able securities  at  a  serious  sacrifice.  That  some  such  cause  was  in  ope- 
ration is  evident,  from  the  bank,  for  the  first  time  in  its  history,  main- 
taining a  reserve  fund,  which,  under  the  name  of  rest,  has  increased 
with  the  business  of  the  house,  and  has  frequently  proved  of  invaluable 
service. 

In  the  earlier  history  of  the  bank,  a  want  of  money  must  have  been 
sometimes  experienced,  as  the  subscribed  capital  was  lent  to  government 
in  payment  of  the  charter.  The  importance  given  by  the  latter,  the 
growing  requirements  of  trade,  the  interest  allowed  on  deposits,  together 
with  private  influence,  produced  clients  to  the  young  establishment.  In 
exchange  for  deposits,  notes  were  issued  to  the  public,  which  readily  cir- 
culated. The  deposits,  cash  and  credit,  together  with  the  notes,  formed, 
indeed,  the  chief  fund  upon  which  the  corporation  traded  ;  but  as  the 
profits  made  in  the  first  few  years  were  nearly,  if  not  altogether,  con- 
sumed by  the  expenses,  the  dividends  continued,  until  1698,  at  the  rate 
paid  by  government,  of  eight  per  cent.  The  preliminary  expenses  in  ob- 
taining a  charter,  the  outlay  prior  to  the  establishment,  the  incomes  of 
the  officers,  together  with  the  rent  and  bad  debts,  must  have  greatly 
diminished  the  early  banking  profits. 

It  was  during  this  period  that  its  notes  were  at  a  discount ;  that  the 

*  Industrial  associations  were  more  productive.  Thread  was,  in  1722,  first  made 
at  Paisley.  In  1723  the  first  agricultural  society  in  Scotland  was  instituted.  In 
Russia,  patronage  and  bounties  were  extended  to  manufactures  of  woollen  and  linen 
cloths. 


Conspiracy — Run  on  the  Bank.  81 

most  strenuous  efforts  were  made  to  destroy  it ;  and  that  its  opponents 
were  most  zealous  in  their  attempts  to  crush  that  bank  which  they  hated 
as  much  as  they  feared.  When  the  business  augmented,  an  increased, 
though  certain  dividend  was  paid,  which  necessarily  varied  with  the 
profits,  as  there  was  no  fund  to  meet  extraordinary  claims,  and  the  gold- 
smiths and  bankers,  jealous  of  the  importance  of  their  competitor,  were 
not  to  be  relied  on  for  assistance.  It  is  always  desirable  to  have  a  steady 
dividend,  as  many  of  the  shareholders  rely  on  it  for  their  support. 
The  variations  of  the  interest,  therefore,  were  probably  inconveniently 
felt.  It  is,  indeed,  a  question  how  much  the  credit  of  a  corporation  is  V 
benefited  by  an  uncertain  dividend  ;  and  an  addition  to  an  uniform  rate 
may  always  be  appended  as  a  bonus.  A  large  reserved  capital  prevented 
the  interest  from  fluctuating ;  and  while  it  added  stability  to  the  bank, 
was  of  great  importance  to  the  direction,  by  giving  them  confidence  in 
their  resources,  and  enabling  them  to  triumph  over  those  perils  which 
must  ever  surround  a  new  establishment,  and  which  are  often  only  dan- 
gerous in  proportion  to  the  smallness  of  its  capital. 

It  is  true  that  calls  might  have  been  made  on  the  proprietary  when- 
ever an  urgency  occurred ;  but  this  would  not  have  been  in  character 
with  the  great  respectability  already  acquired  by  the  Bank  of  England. 
For  such  reasons  a  reserve  fund  was  desirable ;  and  for  these,  with  other 
and  more  powerful  causes,  the  rest,  that  great  capital  which  has  often 
been  attacked,  and  more  often  envied,  was  commenced  in  the  year  1722. 

It  has  been  already  seen  that  conspiracies  against  the  State  have 
usually  produced  an  effect  upon  the  bank.  The  confidence  reposed  in  it 
vanishes  rapidly  under  the  appearance  of  difficulty ;  and  the  more  im- 
plicit the  previous  trust  the  greater  the  alarm  when  the  balance  of  the 
public  mind  is  disturbed.  Men  act  when  they  should  reason ;  and  the 
hazard  of  the  bank  is  in  proportion  to  the  mystery  which  confuses  the 
people,  rather  than  to  the  danger  which  environs  the  State.  An  obscure 
conspiracy  which  ended,  as  it  was  perhaps  founded,  in  nothing,  was  com- 
municated by  the  Dulce  of  Orleans  to  King  George  I.,  and  was  stated 
to  be  formed  against  the  person  and  throne  of  the  latter.  A  proclama- 
tion of  the  exiled  Pretender  was  gravely  produced,  which  as  gravely  pro- 
posed a  peaceable  cession  of  the  throne,  by  the  English  monarch,  who, 
in  return,  was  to  be  made  king  of  liis  native  States.  Every  effort,  both 
foreign  and  domestic,  was  reported  to  have  been  made.  The  people 
were  to  be  intrigued  with  ;  government  was  to  be  subverted ;  money 
was  said  to  be  provided  ;  officers  engaged  from  abroad ;  arms  and  ammu- 
nition procured  ;  and  the  city  of  London  was  to  be  marked  with  blood- 
shed and  confusion.  The  Royal  Exchange  was  to  witness  the  proclama- 
tion of  the  Pretender ;  the  exchequer  was  to  be  seized,  and  the  Bank  of 
England  to  be  plundered.  At  this  period  the  Jacobites  were  a  numerous, 
and  even  a  powerful  party ;  and  a  plot  conveyed  from  so  important  a 
personage  as  the  Regent  of  France,  struck  alarm  throughout  the  nation  ; 
and  once  more  the  banlc  paid  the  penalty  of  its  greatness  by  the  public 
running  to  demand  its  cash.  The  stock  fell  in  value.  South  Sea  funds 
sympathized,  and  decreased  in  price.  Vigorous  measures  were  had  re- 
course to,  to  meet  an  evil  so  sudden  and  alarming.  A  camp  was  formed 
in  Hyde  Park.     Troops  were  ordered  from  Ireland.     The  States  of  Hoi- 


82  History  of  the  Bank  of  England. 

land  prepared  to  embark  their  guarantee  troops.  The  Bishop  of  Roches- 
ter and  Bishop  Atterbury,  with  some  of  the  nobility,  were  seized.  The 
proclamation  of  the  Pretender  was  burned  at  the  Royal  Exchange,  and 
the  House  of  Commons  passed  a  bill  in  support  of  the  means  adopted. 
These  proceedings  overawed  the  malcontents ;  the  run  upon  the  bank 
soon  ceased,  and  the  city  was  restored  to  its  propriety. 

In  1725,  the  bank  consented  to  reduce  the  interest  on  two  millions, 
advanced  in  1716,  from  five  to  four  per  cent. ;  and  in  1728,*  govern- 
ment ao;ain  resorted  to  the  Bank  of  Enijland  to  assist  in  meeting  a  vote 
of  four  millions,  to  pay  the  expenses  of  the  preceding  year.  In  times  of 
war  the  ministry  have  always  applied  to  this  establishment  to  support 
them  during  those  periods  of  danger  and  distrust,  which  must  ever  arise 
in  a  long  contest  with  a  powerful  enemy.  But  that  danger  had  ceased, 
and  the  nation  had  enjoyed  a  period  of  profound  quiet.  Notwithstand- 
ing this,  the  directors  were  again  applied  to  for  assistance  in  the  above 
year  ;  and  the  application  was  met  by  an  advance  of  £1,750,000,  (on  the 
security  of  the  coal  and  culm  duties,)  at  four  per  cent,  per  annum.  They 
were  enabled  to  advance  this  large  sum  without  a  further  call  on  their 
proprietary,  in  consequence  of  one  million  having  been  repaid  them,  in 
l727,f  of  the  previous  debt.  In  the  following  year  they  advanced  a 
further  sum  of  £1,250,000,  at  four  per  cent.,  on  security  of  the  lottery, 
and  were  repaid  £775,027  for  redemption  of  the  remainder  of  the  capi- 
tal, due  to  them  for  cancelling  exchequer  bills  in  1709  ;  and  also 
£500,000  towards  redeeming  the  capital  of  two  millions,  due  for  ex- 
chequer bills,  delivered  up  in  I7l7. 

The  notes  issued  at  this  period  were  made  out  in  the  various  names  of 
the  public  ;  and  as  part  only  was  printed,  it  was  the  duty  of  the  clerk  to 
enter  that  portion  which  was  not  engraved.  No  note  was  circulated  for 
less  than  £20  ;  and  though  the  demand  was  limited,  this  mode  must 
have  added  materially  to  the  business  of  the  officers.  If  we  may  judge, 
also,  from  the  dividends,  the  directors  did  not  shrink  from  their  share  of 
work,  as  each  warrant  was  signed  by  two  of  their  body.  The  num- 
ber of  fund-holders  was  considerable,  and  the  labor,  therefore,  was  not  of 
a  trifling  character. 

Prior  to  the  year  1732,  the  court  of  directors  had  carried  on  their 
business  within  the  hall  of  the  Grocers'  Company,  They  had  commenced 
their  career  unostentatiously,  and  they  had  met  with  their  reward.  With 
tifty-four  assistants,  whose  names  and  salaries  are  recorded  in  the  ap- 
pendix, they  had  gone  on  prospering,  until  the  business  demanded  a 
building  exclusively  devoted  to  its  interests.  The  time  had  now  arrived 
when  an  enlarged  edifice  was  not  only  advisable  but  necessary ;  and  on 
20th  January,  1732,J  it  was  unanimously  resolved  to  erect  a  hall  and 

*  Warm  debate  this  year  on  the  national  debt.  Walpole,  Premier,  represented 
that  a  reduction,  to  the  extent  of  £2,698,000,  had  occurred  since  1716. 

f  In  this  year  the  Royal  Bank  of  Scotland  was  incorporated.  The  Dublin  Linen 
Hall  was  opened,  and  the  first  establishment  for  the  manufacture  of  Irish  cambric, 
at  Dundalk,  occurred  in  the  following  j"ear,  (1728.) 

\  Commercial  activity  was  renewed  and  public  confidence  was  restored,  in  the 
years  1730 — 1732.  In  1730,  tin  plate  was  first  made  in  England.  In  1732,  a  char- 
ter was  granted  for  the  colony  of  Georgia. 


Statue  of  William  III.  83 

oflSce  in  Threadneedle-street ;  and  the  site  chosen  for  the  new  edifice  was 
that  of  the  house  and  garden  of  Sir  John  Houblon,  first  governor  of  the 
bank.  The  structure  was  contracted  for  by  Dunn  &  Townshend,  emi- 
nent builders  of  the  day,  after  designs  by  Mr.  George  Sampson. 

On  Thursday,  the  3d  of  August,  at  one  o'clock  in  the  afternoon,  the 
new  building  was  commenced,  a  stone,  on  which  the  names  of  the  di- 
rectors were  placed,  being  made  the  foundation  for  one  of  the  pillars. 
Twenty  guineas  were  presented  to  the  workmen  for  distribution,  and,  on 
the  5th  of  June,  1V34,  business  was  commenced  in  that  edifice,  the  pre- 
sent importance  of  which  is  unparalleled  in  the  history  of  monetary 
establishments.  Notwithstanding  the  sagacity  of  those  who  governed 
its  concerns,  it  may  reasonably  be  questioned  whether  they  imagined 
the  time  would  ever  arrive  when  its  buildings  would  occupy  acres;  when 
the  movements  of  its  governors,  in  the  words  of  the  historiographer  of 
London,  would  influence  the  whole  body  of  the  public,  its  oflSces  expel  a 
church  from  its  site,  and  emulate  the  palaces  of  emperors ;  when  their 
determination,  according  to  Richard  Cobden,  would  affect  all  the  mar- 
kets in  the  world ;  and  the  representatives  of  commerce  in  the  East,  and 
the  pioneers  of  trade  and  civilization  in  the  West,  watch  earnestly  and 
anxiously  the  proceedings  of  the  directors  of  the  Bank  of  England. 

"  I  happened  to  be  travelling  in  Turkey  and  Greece,  in  the  spring  of 
1837,"  said  this  gentleman,  in  his  evidence  on  banks  of  issue,  "and  I 
saw,  in  the  little  island  of  Syra,  the  Greek  merchants  there,  with  their 
telescopes  in  their  hands,  looking  out  anxiously  for  the  arrival  of  a  vessel 
from  Trieste,  giving  an  account  of  the  proceedings  of  the  Bank  of  Eng- 
land, as  a  merchant,  on  the  Exchange  at  Manchester,  would  watch  for 
the  arrival  of  the  mail,  to  know  what  the  next  step  to  be  taken  by  the 
bank  directors  would  be ;  and  we  know  that,  in  the  message  of  the 
president  of  the  United  States,  in  1837,  and  in  the  addresses  of  some 
of  the  governors  of  the  States — New-York  in  particular — the  Bank  of 
England  was  not  only  mentioned  by  name,  but  a  considerable  space 
given  to  the  discussion  of  its  policy." 

On  the  1st  of  January,  1735,*  the  marble  statue  of  the  founder  of  the 
corporation,  by  Cheere,  which  the  reader  has  probably  often  seen,  was 
placed  upon  its  pedestal,  and  a  volley  fired  by  the  servants  of  the  bank, 
in  honor  of  the  founder.  The  following  is  a  translation  of  the  in- 
scription : 

"for  restoring  efficacy  to  the  laws, 

authority  to  the  courts  of  justice, 

dignity  to  the  parliament, 

to  all  his  subjects  their  religion  and  liberties, 

AND 

FOR  CONFIRMING  THESE   TO   POSTERITY 

BY  THE   SUCCESSION   OF   THE   ILLUSTRIOUS  HOUSE 

OF   HANOVER 

TO  THE   BRITISH  THRONE, 

TO   THE  BEST   OF   PRINCES,   WILLIAM  lU., 

FOUNDER   OF  THE   BANK, 

THIS  CORPORATION,    FROM  A   SENSE   OF   GRATITUDE, 

HAS   ERECTED   THIS   STATUE, 

AND   DEDICATED   IT  TO    HIS   MEMORY, 

IN  THE   YEAR   OF   OUR   LORD   MDCCXXXIV., 

AND   THE   FIRST   YEAR   OF   THIS   BUILDING." 

*  The  counterfeiting  of  bank  bills  was  this  year  made  a  felony. 


84  History  of  the  Bank  of  England. 

This  is  a  graceful  homage  to  the  man  who  was  the  origin  of  its  great- 
ness. It  is  a  testimony  of  more  worth  than  the  engraven  marble  which 
records  a  conquest.  It  is  a  tribute  of  higher  honor  than  the  brass  by 
the  way-side,  which  tells  of  goodly  cities  sacked.  The  past  age  did  not 
— even  the  present  may  not — fully  appreciate  this  ;  but  the  progressive 
spirit  of  the  times  renders  it  certain,  that,  at  some  future  period,  the 
name  of  William  III.  will  be  regarded  Avith  more  honor  as  the  founder 
of  the  Bank  of  England,  than  as  the  soldier  who  fought  in  the  trenches 
at  Namur,  or  the  statesman  who  organized  the  grand  alliance  of  Eu- 
ropean powers  against  the  house  of  Bourbon. 

The  inefficiency  of  the  police  a  century  ago  is  a  matter  of  history.  It 
is  dijEcult  to  say  whether  murders  or  robberies  most  abounded.  The 
records  of  the  period  bear  witness  that  both  were  committed  with  compara- 
tive impunity  ;  that  "  highwaymen,"  who  were  then  peculiar  to^the  time, 
flourished  in  all  the  gay  insouciance  which  arises  from  a  precarious  mode 
of  existence.  The  literature  of  the  day  is  full  of  allusions  to  them  ;  and 
an  opera,  commemorating  the  heroism  of  one  of  the  fraternity,  was  per- 
formed on  the  stage,  and  applauded  by  lords  and  ladies,  until  it  became 
a  fashion.  Amid  these  scenes  of  crime,  that  of  robbing  the  mail  was  a 
favorite  occupation,  as  it  not  only  required,  but  also  rewarded,  boldness. 
These  robberies  grew  to  such  a  height,  by  1738,  that  the  postmaster 
made  a  representation  to  the  bank  upon  the  subject ;  and  the  directors, 
in  consequence,  advertised  an  issue  of  bills,  payable  at  seven  days'  sight, 
"  that  in  case  of  the  mail  being  robbed,  the  proprietor  may  have  time  to 
give  notice." 

In  1742*  the  period  for  the  reconstruction  of  the  bank  charter  had  ar- 
rived. The  renewal  of  the  privileges  of  the  company  created  the  usual 
consideration  of  what  amount  might  be  gained  by  the  State  in  payment, 
and  of  how  hard  a  bargain  might  be  made  with  the  corporation  when 
compelled  to  sue  for  a  favor.  The  latter  were  obliged  to  buy,  and  the 
government  determined  to  sell  at  as  high  a  price  as  practicable.  The 
loan  of  one  million  six  hundred  thousand  pounds,  without  interest,  was 
required  by  the  State,  too  frequently  a  hard  task-master  in  its  transactions 
with  the  corporation. 

It  Avas  effected  by  blending  this  sum  with  the  previous  loan  of 
£1,600,000,  at  six  per  cent.,  and  the  united  sum  of  £3,200,000  bore  the 
diminished  interest  of  three  per  cent.  In  compensation,  the  exclusive 
banking  privileges  were  renewed  till  August,  1764.  By  this  act  "  per- 
sons forging,  counterfeiting,  or  altering  any  bank  note,  bill  of  exchange, 
dividend  warrant,  or  any  bond  or  obligation  under  the  bank  seal,  shall 
suffer  death  :"  and  also,  "  the  company's  servants,  breaking  their  trust  to 
the  company,  shall  suffer  death." 

Another  danger  arose  with  the  times.  Since  the  run  on  the  bankers, 
when  the  States'  admiral  swept  our  commerce  from  the  Thames,  and 
menaced  our  strongholds,  London  had  been  free  from  the  danger  of  in- 
vasion. The  rebellion  of  1715  had  been  quelled  with  ease;  but  that 
which  followed,  in  the  memorable  year  of  1745,  was  impressive  from  its 

*  Walpole  resigned  the  seals  of  office  February  11th,  (died  18th  March,  1745, 
gaed  68.) 


Rebellion  of  \^ i^b — Popularity  of  the  Chevalier.  85 

picturesque  features,  while  it  was  dangerous  only  from  the  paralytic  fear 
which  seized  the  nation.  It  has  ever  been  a  feature  in  the  history  of  the 
bank,  that,  although  not,  strictly  speaking,  a  government  establishment,  it 
has  always  been  a  point  of  attack  for  the  political  rabble  in  times  of  tu- 
mult ;  while,  during  crises  which  should  only  affect  the  State,  doubts 
have  been  thrown  on  its  credit,  and  senseless  clamor  made  for  its  gold. 
That  which  is  now  to  be  related  was  one  of  the  most  important  periods 
of  its  career.  The  relation  may  be  considered  prolix ;  but  a  mere  an- 
nouncement that,  in  the  year  1745,*  a  great  demand  for  gold  occurred, 
would  be  as  uninstructive  as  uninteresting.  The  adventurous  daring 
which  occasioned  it,  the  panic  which  seized  peer  as  well  as  peasant,  the 
moral  and  the  mental  features  of  the  period,  are  all  necessary  to  explain 
why  the  directors  of  the  Bank  of  England  were  compelled  to  have  re- 
course to  stratagem  to  meet  the  demands  made  upon  their  specie. 

The  expedition  of  Charles  Edavard  was  as  romantic  as  it  was  remark- 
able. Landing  in  the  wilds  of  Moidart,  attended  by  only  seven  devoted 
gentlemen,  he  succeeded  in  striking  a  terror  throughout  England.  The 
prize  for  which  he  struck  was  a  kingdom.  The  spirit  with  which  he 
contended  was  worthy  the  prize.  His  march  was  one  scene  of  triumph. 
From  highland  to  lowland,  from  barren  height  and  fertile  vale,  he  gath- 
ered strength,  until,  with  a  solitary  guinea  in  his  pocket,  the  gallant  ad- 
venturer entered  the  fair  city  of  Perth.  From  Perth  he  passed  on  to  the 
capital  of  Scotland ;  and  the  old  walls  of  Holyrood,  the  antique  palace  of 
the  Scottish  monarchs,  resounded  once  more  with  the  sounds  of  joy. 
The  lofty  loyalty  of  the  people  of  Scotland  responded  to  the  claims  of 
the  unfortunate  house,  and  the  tartan  of  the  clan  Stuart  waved  a  joyous 
welcome  from  street  and  square  of  the  city  of  palaces.  The  person  of  the 
Pretender,  his  chivalrous  adventure,  his  princely  bearing,  won  him  "gold- 
en opinions."  Men  fought  for  him.  Women  embraced  him.  At 
Doune  some  Scottish  lasses  kissed  his  hand ;  and  one,  with  the  romantic 
enthusiasm  of  girlhood,  begged  permission  to  kiss  the  royal  lips.  The 
favor  was  graciously  granted  by  the  young  chevalier,  who,  taking  the 
loyal  lady  in  his  arms,  "  kissed  her  blushing  face  from  ear  to  ear,"  to  the 
great  vexation,  adds  Chambers,  of  the  other  ladies  who  had  been  con- 
tented with  a  less  liberal  allowance  of  his  princely  grace.  These  things 
are  related  because  they  prove  the  great  devotion  evinced  throughout 
Scotland,  and  explain  why,  with  a  mere  handful  of  men,  Charles  Ed- 
ward had,  even  then,  struck  a  panic  into  the  commercial  heart  of  Eng- 
land. When,  therefore,  Carlisle  had  capitulated,  when  Penrith  was  in- 
vested, and  Manchester,  with  its  thirty  thousand  inhabitants,  "  was  taken 
by  a  sergeant,  a  drummer,  and  a  girl,"  the  English  were  seized  with 
dismay. 

London  expected,  in  two  or  three  days,  to  witness  the  triumphant  en- 
try of  the  rebel  army,  the  seizure  of  her  treasure,  and  the  plunder  of  her 
citizens.  The  adherents  of  the  young  adventurer  had  printed  his  decla- 
ration to  the  people  of  Great  Britain,  and  throughout  the  capital,  in  the 
highways  and  byways,  in  the  streets  of  the  town,  in  the  dwellings  of  its 
inhabitants,  were  these  declarations  mysteriously  spread.      Men  found 

*  Bank  of  England  post-bills  were  this  year  in  part  paid  in  gold. 


86  History  of  the  Bank  of  England. 

them  in  their  houses;  they  were  placed  under  their  doorways;  they 
penetrated  the  sanctuary  of  their  homes.  It  was  a  time  of  great  rejoicing 
for  the  stanch  Jacobite.  It  was  a  period  of  dread  for  the  loyal  and 
peaceable  citizen.  Consternation  obtained  throughout  the  capital.  The 
Duke  of  Newcastle,  Secretary  of  State  for  the  War  Department,  whose 
name  was  said,  by  Sir  Robert  Walpole,  to  be  perfidy,  shut  himself  in 
his  closet  for  three  days  to  decide  on  his  conduct,  uncertain  whether  he 
should  support  his  monarch  or  declare  for  the  prince.  The  first  Catholic 
peer  of  the  realm  was  ready  to  join  the  invader.  The  inhabitants  fled  to 
the  country  with  their  most  precious  effects.  The  king  caused  his  valu- 
ables to  be  removed  to  a  yacht  by  the  Tower,  and  was  prepared  to  effect 
an  escape.  A  proclamation  was  issued  for  a  general  fast.  A  run  com- 
menced upon  the  bank,  for  which  the  directors  were  not  prepared  ;  and 
there  appeared  every  prospect  of  its  destruction.  The  funds  fell;  the 
quotations  of  the  day  do  not  show  so  great  a  decline  as  might  have  been 
expected ;  but  the  probability  is  that  they  were  but  nominal. 

The  second  article  of  the  manifesto  issued  by  the  Pretender  stated, 
that  though  the  national  debt  "  was  contracted  under  an  unlawful  gov- 
ernment, and  was  a  most  heavy  load  unto  the  nation,  yet  his  father  would 
take  the  advice  of  his  Parliament."  This  was  deemed  small  comfort  for 
the  fundholders,  who  placed  no  faith  in  the  honesty  of  a  Senate,  called 
upon  to  act  in  a  period  of  convulsion,  under  an  arbitrary  Stuart.  The 
sins  of  the  sire  were  visited  upon  the  children.  The  seizure  of  the 
money  in  the  mint  by  the  first  Charles,  and  the  shutting  up  the  ex- 
chequer by  his  dissolute  son,  were  remembered  to  the  injury  of  their 
descendant. 

But  more  alarming  news  was  in  store  for  the  citizens.  The  town  of 
Derby,  only  one  hundred  and  twenty  miles  from  the  capital,  was  occu- 
pied by  the  rebels.  The  magistrates  had  fled  in  terror.  London,  with 
all  her  treasure,  was  temptingly  exposed.  The  alarm  of  the  citizens 
magnified  the  reports,  and  the  reports  increased  in  proportion  to  the 
alarm.  During  the  whole  of  one  day  passed  in  Derby,  the  Highlanders 
fought  for  precedency  in  getting  their  claymores  sharpened  at  the  shops 
of  the  cutlers.  The  habitants  of  London  looked  on  the  rebels  as  wild 
men,  coming  from  the  depths  of  interminable  forests,  where  they  dwelt 
in  caverns,  and  lived  on  human  flesh.  Mothers  wept  over  their  children  ; 
and  substantial  traders  exaggerated  the  alarm  that  spread  throughout  the 
shops  and  the  counting-houses  of  the  great  city.  With  these  prospects 
the  merchants  outvied  each  other  in  liberal  subscriptions,  which,  while 
they  were  recorded  as  the  fruits  of  loyalty,  were  really  the  offspring  of 
fear. 

The  day  on  which  the  news  arrived  that  the  rebels  were  at  Derby, 
was  known  in  London  as  black  Friday.  The  gates  of  the  city  were  shut. 
The  train-bands  were  placed  on  duty  night  and  day.  The  guards  were 
ordered  out.  The  Tower  was  closed  before  its  time.  The  shops  were 
unopened  ;  and  no  business  was  done  excepting  at  the  bank.  Many  of 
the  inhabitants  collected  their  valuables,  and  fled  from  the  country.  The 
Stuarts  had  always  been  partial  to  obtaining  money  by  the  strong  hand, 
and  Charles  Edward  had  imitated  the  profitable  example.  The  Lon- 
doners had  heard  of  £5,000  raised  in  Glasgow ;  of  heavy  contributions 


Artifice  of  the  Bank.  87 

levied  in  Manchester ;  of  £2,500  procured  in  Derby,  'with  minor  sums 
in  other  places ;  and  they  watched,  with  almost  breathless  interest,  the 
advance  of  the  Pretender,  in  full  expectation  of  similar  results. 

The  effect  upon  the  national  bank  was  as  usual.  Its  interests  were  in- 
volved in  those  of  the  State  ;  and  the  creditors  flocked  in  crowds  to  ob- 
tain payment  for  their  notes.  The  directors,  unprepared  for  such  a 
casualty,  (who  could  have  foreseen  that  a  few  thousand  men  would  over- 
run half  England  ?)  had  recourse  to  a  justifiable  artifice.  The  Chevalier 
Johnston,  whose  evidence  was  collected  immediately  after  the  battle  of 
Culloden,  says,  that  the  bank  only  escaped  bankruptcy  by  a  stratagem. 
Payment  was  not  refused  ;  but  the  corporation  retained  its  specie,  by 
employing  agents  to  enter  with  notes,  who,  to  gain  time,  were  paid  in 
sixpences ;  and  as  those  who  came  first  were  entitled  to  priority  of  pay- 
ment, the  agents  Avent  out  at  one  door  with  the  specie  they  had  received, 
and  brought  it  back  by  another,  so  that  the  bona  fide  holders  of  notes 
could  never  get  near  enough  to  present  them.  "  By  this  artifice,"  says 
the  Chevalier,  somewhat  quaintly,  "the  bank  preserved  its  credit,  and 
literally  faced  its  creditors."  The  wisdom  of  the  artifice  was  witnessed 
in  its  effect.  The  London  merchants,  with  honorable  promptitude,  called 
a  meeting  of  their  body  at  Gakraway's  coffee-house.  They  expressed 
their  confidence  in  the  bank  corporation,  and  agreed  to  receive  its  notes 
in  payment.  The  following  was  their  resolution,  and  deserves  to  be  re- 
corded : 

"  We,  the  undersigned,  merchants  and  others,  being  sensible  how 
necessary  the  preservation  of  public  credit  is  at  this  time,  do  hereby  de- 
clare that  we  will  not  refuse  to  receive  bank  notes  in  payment  of  any 
sum  of  money  to  be  paid  to  us ;  and  we  will  use  our  utmost  endeavors 
to  make  our  payments  in  the  same  manner. 

''26th  Sept.,  1745." 

The  feeling  which  dictated  this  resolution  was  very  general,  as,  by  four 
o'clock  in  the  afternoon,  it  was  signed  by  one  thousand  one  hundred  and 
forty  merchants,  large  traders  and  proprietors  of  the  public  funds.  His- 
tory records  the  retreat  of  the  young  Pretender  from  Derby,  the  news  of 
which  stopped  the  run,  and  brought  confidence  to  the  homes  of  the 
citizens.  The  policy  of  Charles  Edward  has  been  questioned.  Doubt- 
less a  march  upon  the  capital  would  have  been  worthy  the  noble  prize 
for  which  he  contended  ;  and  it  is  the  opinion  of  many  that  he  must 
have  been  successful.  This  might  have  been  the  case  ;  but  it  is  scarcely 
probable  that  the  religion  which  gave  William  the  English  crown  would 
have  submitted  once  more  to  the  despotic  sway  of  a  Stuart  ;  and  still 
less  is  it  to  be  imagined  that  the  Stuart  would  have  forgotten  those 
dreams  of  absolute  power  which  had  driven  him  from  the  throne,  and 
still  lingered  with  him  in  the  mock  monarchy  of  St.  Germain's.  It  must 
have  been  another  period  of  fear  and  dread  to  the  supporters  of  the  bank. 
Had  Charles  Edward  reached  the  capital,  a  levy  on  it  would  have  been 
his  first  act;  and  that  levy  would  have  been  in  proportion  to  his  own 
power,  the  hatred  which  he  bore  it  for  supporting  the  revolution,  and  the 
rapacity  of  the  exiled  house.  The  danger  passed  away  with  the  crisis. 
The  adventurer  lost  his  only  chance  of  a  crown,  and  commenced  a  dis- 


88  History  of  the  Bank  of  Ewjland. 

astrous  retreat,  which  was  closed  by  his  escape  from  Scotland.  Confi- 
dence was  once  more  restored.  Tlie  shops  were  re-opened.  The  citizens 
grew  suddenly  brave.  The  courtiers  grew  doubly  loyal.  The  vigor  of 
the  people  returned,  and  London  was  a  scene  of  rejoicing._  Commerce 
resumed  its  pristine  strength  ;  and  the  only  memorials  which  remained 
of  the  past  panic  were  to  be  found  in  the  punishment  of  those  misguided 
men  who,  under  a  sense  of  duty,  had  supported  the  scion  of  their  ancient 
monarchical  race. 

The  particulars  which  led  to  this  panic  have  been  fully  recounted ;  for 
it  is  the  last  instance  of  a  run  occasioned  solely  by  the  fear  of  invasion ; 
and  the  last  time  that  Englishmen  lost  faith  in  their  political  institutions, 
or  sought  to  empty  their  bankers'  coffers  from  fear  of  foreign  or  domestic 
•warfare. 

The  following  anecdote,  given  by  Mr.  Ireland,  who  says  he  received 
it  from  an  authority  not  to  be  doubted,  is,  if  true,  curiously  illustrative 
of  the  evil  spirit  which,  only  a  century  ago,  influenced  public  bodies. 
It  is  probably  a  partial  statement. 

"  It  is  well  known  that,  in  the  year  1745,  on  account  of  the  domestic 
confusion  which  prevailed  in  the  northern  part  of  this  island,  bank  notes 
were  at  a  considerable  discount.  The  notes,  however,  which  were  issued 
by  Child's  house,  as  well  as  those  of  IIoake  &  Co.,  still  maintained 
their  credit,  and  were  circulated  at  par.  The  bank  directors,  alarmed  at 
the  depreciation  of  their  paper,  and  attributing  it  to  the  high  estimation 
in  which  the  house  of  Messrs.  Child  still  remained,  attempted,  by  very 
unftiir  artifices,  to  ruin  their  reputation.  This  plan  they  endeavored  to 
accomplish  by  collecting  a  very  large  quantity  of  their  notes,  and  pouring 
them  in  all  together  for  payment  on  the  same  day.  Before  the  project 
was  executed,  the  Duchess  of  Marlborough,  who  had  received  some  inti- 
mation of  it,  imparted  the  information  to  Mr.  Child,  and  supplied  him 
with  a  sum  of  money  more  than  sufficient  to  answer  the  amplest  demand 
that  could  be  made  upon  them.  In  consequence  of  this  scheme,  the 
notes  were  sent  by  the  bank,  and  were  paid  in  their  own  paper ;  a  cir- 
cumstance which  occasioned  considerable  loss  to  that  corporation,  their 
paper  being  circulated  considerably  below  par.  Perhaps  this  anecdote 
will  be  confirmed  by  the  well-known  circumstance  of  the  hostility  of  her 
Grace  to  the  administrators  of  that  trust."  The  precision  with  which 
this  account  is  given,  must  be  accepted  as  a  reason  for  its  insertion.  It 
is,  however,  most  difficult  of  belief,  that  any  body  of  honorable  men  would 
act  so  disgraceful  a  part.  The  story  has,  in  all  probability,  arisen  out  of 
some  financial  operation,  the  object  of  which  was  perverted  by  the  oppo- 
nents of  the  bank,  because  it  was  beyond  their  comprehension. 

The  rebellion  was  scarcely  over  when  the  government  were  compelled 
to  apply  once  more  for  assistance.  The  cost  of  the  war,  which  had  been 
fiercely  contested  with  France,  in  order  to  preserve  the  integrity  of  the 
Hanoverian  Electorate,  together  with  the  expenses  attending  the  invasion, 
had  pressed  heavily  on  the  resources  of  the  State. 

The  ministers  endeavored  to  meet  their  difficulties  by  opening  a  public 
subscription,  in  1746  ;  but  the  moneyed  interest  did  not  respond.  The 
great  support  given  to  the  credit  of  the  bank  by  the  mercantile  commu- 
Eity  had  been  thoroughly  successful,  and  the  company  were  enabled  to 


Reduction  of  Interest,  89 

offer  that  assistance,  which  the  State  found  it  clifRcult  otherwise  to  procure. 
One  million  was  advanced  to  government  at  four  per  cent,  interest ;  and 
the  court  of  proprietors  authorized  the  directors  to  draw  up  proposals  for 
converting  £986,000,  held  by  them  in  exchequer  bills,  into  an  annuity,  at 
four  cent. ;  and  for  creating  new  stock  to  the  same  amount.  The  pro- 
posal was  accepted,  and  an  act  passed  to  authorize  it.  A  call  of  ten  per 
cent,  was  made  upon  the  proprietary,  and  the  bank  capital  increased  to 
£10,780,000.  Even  at  this  late  period,  some  of  the  proprietors  neglected 
to  answer  the  call,  and  the  directors  sold  a  sufficient  amount  of  their 
stock  (about  £12,000)  to  produce  the  required  sum. 

In  1746,  the  capital,  on  which  the  bank  stock  proprietors  divided, 
amounted  to  £10,780,000.  In  a  little  more  than  half  a  century  it  had 
been  more  than  octupled,  so  great  had  been  the  prosperity  of  the  cor- 
poration. The  dividends  had  varied  with  the  success ;  and  though  at 
one  period  ten  and  a  half  per  cent,  for  the  half-year  was  paid,  the  average 
amount  was  greatly  below  this;  and,  in  1746,  the  half-yearly  dividend 
had  fallen  to  two  and  three-quarters.  The  value  of  money,  also,  which 
had  been  so  enormous  previous  to  the  new  establishment,  had  been  re- 
duced considerably.  At  first,  the  rate  of  discount  was  from  four  and  a 
half  to  six  per  cent,  and  a  less  amount  was  charged  to  those  who  kept 
accounts  with  the  bank ;  inland  bills  being  discounted  for  them  at  four 
and  a  half,  and  foreign  bills  at  three  per  cent. ;  while  six  per  cent,  was 
charged  for  bills  of  all  kinds  to  other  persons.  The  rates  of  discount 
were  afterwards  equalized,  and  varied  from  four  to  five  percent,  till  1775, 
when  the  latter  sum  was  fixed  upon,  at  Avhich  it  remained  till  1822,  This 
reduced  value  of  money  was  advantageously  experienced  by  government 
receiving  the  same  benefit  in  1745  for  three  per  cent.,  for  which,  before 
1690,  they  had  paid  twenty-five  to  thirty  per  cent.  It  has  not  been  con- 
sidered necessary  to  detail  on  each  occasion  the  rise  or  fall  of  the  divi- 
dends, given  to  the  proprietary,  as  a  clearer  and  more  comprehensive  view 
may  be  obtained  in  the  appendix. 

Another  reduction  of  the  interest  on  the  national  debt  was  eff'ected  in 
1750  ;*  a  meeting  of  the  corporation  was  called  at  Merchant  Tailors' 
Hall,  at  Avhich  the  proposals  of  the  ministry  were  acceded  to,  and  three 
instead  of  four  per  cent,  agreed  to  be  received  on  £8,486,800  of  the 
government  debt.  In  addition,  the  company  consented  to  advance  a 
sufficient  amount  to  pay  off"  the  dissentients  ;  and  to  raise  this  they  estab- 
lished a  "  bank  circulation."  x\s  the  amount  to  be  required  was  uncer- 
tain, books  were  opened  to  the  public,  and  any  individual  was  allowed  to 
enter  the  sum  he  proposed  to  lend,  in  case  it  should  be  called  for.  When 
the  books  were  closed,  the  bank  had  the  power  of  calling  for  all  or  any 
part  of  the  sum  so  subscribed.  Two  shillings  per  cent,  was  to  be  paid 
on  the  amoujit  proposed,  and  four  pounds  per  cent,  on  the  sum  advanced. 
The  payment  required  by  government  for  those  who  did  not  consent  to 
the  reduction,  amounted  to  £1,190,041,  For  this  sura,  exchequer  bills, 
bearing  interest  at  £3  per  cent.,  were  received  in  exchange. 

*  The  failure  of  the  Bank  of  Genoa  was  announced  tliis  year.  The  manufacture 
of  carpets  in  England  was  conamenced  by  some  French  artisans.  The  semi-annual 
dividends  of  the  bank  this  year  were  2^  per  cent,  each,  the  stock  selling  at  131 
to  1S6. 


90  History  of  the  Bank  of  England. 

The  course  of  this  history  will  not  record  the  many  transactions  in 
which  the  bank  have  been  concerned  for  government  in  the  creation  of  stock. 
The  year  1752,  in  which  the  foundation  of  the  present  "three  per  cent, 
consols"  was  laid,  is,  however,  sufficiently  interesting  to  attract  attention. 
This  stock  was  thus  termed  from  the  balance  of  some  annuities,  granted 
by  George  I.,  being  consolidated  into  one  fund  with  a  three  per  cent, 
stock,  formed  in  1731.  The  amount  of  this  security  at  the  present  time 
is  upwards  of  360  millions,  to  so  large  a  superstructure  has  it  grown  from 
a  small  foundation.  The  same  observation  will  also  apply  to  the  year 
1757,  when  the  stock,  which  had  borne  four  per  cent,  interest  till  1750, 
and  from  that  period  paid  tliree  and  a  half,  was  reduced  to  three  per  cent. ; 
from  this  operation  the  name  of  the  "  three  per  cents  reduced"  is  derived. 
This  stock  is  much  smaller  than  the  former,  as  it  amounts  to  little  more 
than  £123,500,000. 

A  correspondent  of  the  "  Gentleman'' s  Magazine'''  gives  the  following 
particulars  of  the  external  appearance  of  the  bank  in  1757.  "When  I 
came  to  London,  and  lived  near  it,  it  was  comparatively  a  small  structure, 
almost  invisible  to  passers  by,  being  surrounded  by  many  others,  viz.,  a 
church  called  St.  Christopher  le  Stocks,  since  pulled  down  ;  three  taverns, 
two  on  the  south  side,  one  (the  Fountain)  in  Bartholomew  Lane,  facing 
the  church  there,  just  where  the  great  door  of  entrance  is  now  placed,  and 
about  fifteen  or  twenty  private  dwelling-houses.  Visitors  are  sometimes 
shown  in  the  bullion  office  the  identical  old  chest,  somewhat  larger  than 
a  common  seaman's,  also  the  original  shelves  or  cases,  where  the  cash, 
notes,  papers  and  books  of  business*  were  kept ;  and  well  are  they  pre- 
served, as  pregnant  vouchers  no  less  of  the  bank's  pristine  simplicity  and 
confined  exertions,  than  of  the  amazing  rapidity  of  its  modern  extension, 
and  almost  boundless  accommodation  of  the  moneyed  interest  and  com- 
mercial world." 

*  Our  draper  now  became  famous  for  his  extraordinarj^  command  of  money,  and  his 
correspondence  extended  as  far  as  Preston,  in  Lancashire.  The  profits  thus  arising 
seemed  boundless,  and  the  next  step  was  taken  by  our  adventurous  shojikeeper :  he 
allowed  a  small  interest  to  his  friends,  the  depositors.  The  new  business  flourished 
to  such  an  extent  that  it  swallowed  up  the  old  one,  and  our  draper  at  length  became 
a  banker  proper,  and  no  more  a  shopkeeper. 

Such  was  tlie  origin  of  the  Smiths.  First  confined  to  the  town  of  Nottingham, 
afterwards  extended  to  Hull  and  Lincoln,  the  business  of  the  firm  required  a  Lon- 
don correspondent  entirely  in  their  interest,  and  such  they  found  in  tlie  late  Mr. 
Payne.  And  thus  was  founded  the  well-known  firm  of  Smith,  Payne  &,  Smith,  whose 
prosperous  career  it  is  not  our  business  to  follow. 

The  increase  of  banks  throughout  the  country  was  actively  encouraged  by  the 
private  bankers  of  London,  and  indeed  the  existence  of  a  great  national  bank  like 
that  of  the  Bank  of  England  naturally  assisted  the  creation  of  smaller  establish- 
ments. 

In  all  those  places,  the  trade  of  which  has  been  sufficient  to  encourage  a  plurality 
of  banks,  it  has  been  found  that  the  competition  has  contributed  to  the  public  ac- 
commodation, there  being  in  all  large  manufacturing  and  commercial  towns  rival 
firms,  whose  financial  operations  could  not,  with  propriety,  be  intrusted  to  the 
same  house. 

"  It  is  not  by  augmenting  the  capital  of  the  country,  but  by  rendering  a  great 
part  of  that  capital  more  active  and  productive  than  it  would  otherwise  be,  that  the 
most  judicious  operations  of  banking  can  increase  the  industry  of  the  country.  That 
part  of  bis  capital,  which  a  dealer  is  obliged  to  keep  by  him  unemployed  and  in 
ready  money,  for  answering  occasional  demands,  is  so  much  dead  stock,  which,  so 
long  as  it  remains  in  this  situation,  produces  nothing  either  to  him  or  to  the  coun- 
try."— Lawson's  History  of  Banking. 


The  First  Forged  Note.  91 


CHAPTER    X. 

THE     FIRST     FORGED     NOTE LEGAL    DECISION ISSUE    OF    NOTES— NEW    CHARTER GREAT 

PANIC     AND     FAILURE    OF    BANKERS   IN    1772 TUE    GORDON     RIOTS CONFUSION    OF    THE 

PEOPLE SUSPENSION    OF  TRADE    IN    THE    CITY ATTACK    ON    THE    BANK ITS   REPULSE 

BEHAVIOR     OF     WILKES EXTRAORDINARY     SERIES     OF     FORGERIES DETECTION   OF    THE 

FORGER HIS    FATE MORLAND    THE     P.UNTER LIBERALITY    OF    THE    DIRECTORS. 

The  day  on  which  a  forged  note  was  first  presented  at  the  Bank  of 
England  forms  a  memorable  era  in  its  history.  For  sixty-four  years  the 
establishment  had  circulated  its  paper  with  freedom  ;  and  during  this 
period  no  attempt  had  been  made  to  imitate  it.  He  who  takes  the  ini- 
tiative in  a  new  line  of  wrong-doing,  has  more  than  the  simple  act  to 
answer  for  ;  and  to  Richard  William  Vaughan,  a  Stafford  linen-draper, 
belongs  the  melancholy  celebrity  of  having  led  the  van  in  this  new  phase 
of  crime,  in  the  year  ITSS,*  The  records  of  his  life  do  not  show  want, 
beggary,  or  starvation  urging  him,  but  a  simple  desire  to  seem  greater  than 
he  was.  By  one  of  the  artists  employed,  and  there  were  several  engaged 
on  different  parts  of  the  notes,  the  discovery  Avas  made.  The  criminal 
had  filled  up  to  the  number  of  twenty  ;  and  deposited  them  in  the  hands 
of  a  young  lady  to  whom  he  was  attached,  as  a  proof  of  his  wealth. 
There  is  no  calculating  how  much  longer  bank  notes  might  have  been 
free  from  imitation,  had  this  man  not  shown  with  what  ease  they  might 
be  counterfeited.  From  this  period  forged  notes  became  common.  The 
faculty  of  imitation  is  so  great,  that  when  the  expectation  of  profit  is 
added,  there  is  little  hope  of  restraining  the  destitute  or  the  bad  man 
from  a  career  which  adds  the  charm  of  novelty  to  the  chance  of  gain. 
The  publicity  given  to  the  fraud,  the  notoriety  of  the  proceedings,  and 
the  execution  of  the  forger,  tended  to  excite  that  morbid  sympathy 
which,  up  to  the  present  day,  is  evinced  for  any  extraordinary  criminal. 
It  is,  therefore,  possible,  that  if  Vaughan  had  not  been  induced  by  cir- 
cumstances to  startle  London  with  his  novel  crime,  the  idea  of  forging 
bank  notes  might  have  been  long  delayed,  and  that  some  of  the  strange 
facts  to  be  related  would  never  have  occurred. 

The  same  year  was  also  memorable  for  a  judgment  passed  by  the  Lord 
Chief-Justice,  in  connection  with  some  notes  which  were  stolen  from  one 
of  the  mails.  The  robber,  after  stopping  the  coach  and  taking  out  all 
the  money  contained  in  the  letters,  went  boldly  to  a  Mr.  Miller,  at  the 
Hatfield  post-office,  who  unhesitatingly  exchanged  one  of  them.  Here 
he  ordered  a  post-chaise  with  four  horses,  and  at  several  stages  passed  oft' 
the  remainder.  They  were,  however,  stopped  at  the  bank,  and  an  action 
was  brought  by  the  possessor  to  recover  the  money.  The  question  was 
an  important  one ;  and  it  was  decided  by  the  law  authorities,  "  That  any 
person  paying  a  valuable  consideration  for  a  bank  note,  payable  to  bearer, 

*  Vaughan  was  executed  for  this  crime. 


92  History  of  the  Bank  of  England. 

in  a  fair  course  of  business,  has  an  undoubted  riglit  to  recover  the  money 
of  the  bank."  The  action  was  maintained  upon  the  plea  that  the  figure 
11,  denoting  the  date,  had  been  converted  by  tlie  robber  to  a  4. 

In  1759,*  bank  notes,  to  a  smaller  amount  than  £20,  were  first  circu- 
lated; and  the  directors  commenced  issues  of  £15  and  £10,  to  meet  the 
necessity  experienced  by  the  community. 

In  January,  l764,f  the  charter,  granted  to  the  bank  in  1745,  had  nearly 
expired,  and  the  question  of  its  renewal  was  again  agitated.  The  cus- 
tomary process  of  extension,  that  process  which  has  procured  a  good 
price  from  the  corporation  for  all  the  favors  granted,  was  once  more 
under  consideration.  The  terms  on  Avhich  government  consented  to 
place  the  exclusive  power  of  the  bank  again  in  its  possession,  Avere  suf- 
ficiently onerous.  By  this  agreement  the  directors  were  to  advance  cash 
for  exchequer  bills  to  the  amount  of  one  million,  at  three  per  cent,  in- 
terest, till  the  year  1766,  when  the  bills  were  to  be  discharged.  They 
were  also  to  pay  £110,000,  and  for  this  they  were  to  receive  neither  in- 
terest nor  repayment.  In  consideration  of  these  sums  they  were  to  con- 
tinue a  body  corporate,  with  all  their  advantages,  till  the  redemption  of 
the  debt,  due  to  them  by  government,  and  one  year's  notice,  from  the 
first  of  August,  1786.  By  the  same  act  it  was  made  felony,  without 
benefit  of  clergy,  to  forge  powers  of  attorney  or  other  authorities,  for  re- 
ceiving dividends,  transferring  or  selling  stock,  or  for  personating  the 
proprietors  of  any  stock,  for  such  purpose. 

The  falling  in  of  the  bank  charter  at  this  period  was  a  piece  of  great 
good  fortune  to  the  government.  A  successful  but  costly  war  had  pressed 
upon  the  nation.  During  this  contest  important  islands  had  been  con- 
quered ;  great  battles  gained;  forts,  castles  and  fortified  cities  had  yielded 
to  our  prowess.  Twelve  millions  had  been  acquired  in  plunder,  and  cap- 
tured standards  were  borne  in  triumph  to  St.  Paul's,  amid  the  shouts  of 
assembled  multitudes.  The  navy  of  France  was  annihilated.  Spain 
loathed  a  contest  which  produced  only  reverses.  Portugal  was  anxious 
for  peace.  The  fall  of  the  French  colonies  was  consummated  at  Martin- 
ique. The  empire  of  the  East  had  been  wrested  from  French  sway,  and 
conquests,  rivalling  those  of  the  "  great  captain,"  accomplished  by  a 
youth  bred  to  a  writing-desk.  France  was  exhausted.  The  treasury  of 
the  "  great  nation''  was  empty.  The  plate  of  "  the  most  Christian  king" 
was  converted  into  money ;  and  England  triumphed  in  a  treaty  which 
consolidated  her  strength ;  which  gave  her  a  great  pre-eminence  among 
the  nations  ;  which  added  to  her  name  a  splendor  she  has  since  retained, 
and  which  the  confidence  of  her  ministry  in  the  resources  of  the  country, 
and  the  assistance  of  the  Bank  of  England,  greatly  tended  to  produce. 
The  expenses  pressed  heavily  upon  the  people.  A  loan,  therefore,  of 
£3,000,000,  with  an  absolute  gift  of  £110,000,  were  no  unimportant  ad- 


*  Further  indications  of  prosperity  existed  this  year  in  the  establishment  of 
thread  and  gauze  manufactures  at  Paisley.  Arkwright's  first  patented  spinning- 
frame  was  made  linown.  Improvements  were  also  made  in  the  stocking-loom.  The 
national  debt  at  this  time  was  £78,000,000. 

•j-  The  first  stamp  act  for  America  was  this  year  introduced  by  Grenville,  and 
passed  March  22,  1765. 


Alarming  Panic.  93 

dition  to  those  sources,  wbicli  had  been  drained  by  the  glorious  and  suc- 
cessful seven  years'  war. 

A  new  crime  was  discovered  in  1767.  The  notice  of  the  clerks  at  the 
bank  had  been  attracted  by  the  habit  of  William  Guest,  a  teller,  pick- 
ing new  from  old  guineas,  without  assigning  any  reason.  An  indefinite 
suspicion,  increased  by  the  knowledge  that  an  ingot  of  gold  had  been 
seen  in  Guest's  possession,  was  attracted  ;  and  although  he  asserted  that 
it  came  from  Holland,  it  was  remarked  to  be  very  unlike  the  regular  bars 
of  gold,  and  that  it  had  a  considerable  quantity  of  copper  on  the  back. 
Attention  being  thus  drawn  to  the  behavior  of  Guest,  he  was  observed 
to  hand  one  Richard  Still  some  guineas,  which  he  took  from  a  private 
drawer,  and  placed  with  the  others  on  the  table.  Still  was  instantly 
followed,  and  on  the  examination  of  his  money,  three  of  the  guineas  in 
his  possession  were  deficient  in  weight.  An  inquiry  was  immediately  in- 
stituted, and  forty  of  the  guineas  in  the  charge  of  Guest  looked  fresher 
than  the  others  upon  the  edges,  and  weighed  much  less  than  the  legiti- 
mate amount.  On  searching  his  home,  four  pounds  eleven  ounces  of 
gold  filings  were  found,  with  some  instruments,  calculated  to  produce  ar 
tificial  edges.  Proofs  soon  multiplied,  and  the  prisoner  was  found  guilty. 
The  instrument  with  which  he  had  effected  his  fraud,  of  which  one  of  the 
witnesses  asserted  it  was  the  greatest  improvement  he  had  ever  seen,  is 
said  to  be  yet  in  the  mint,  a  memento  of  the  prisoner's  capacity  and 
crime. 

In  June,  1772,  one  of  those  panics  occurred  with  which  London  is  un- 
happily so  familiar.  On  the  10th  of  the  month,  Neale  and  Co.,  bank- 
ers in  Threadneedle-street,  stopped  payment.  Other  failures  resulted  in 
consequence ;  and  throughout  the  city  there  was  a  general  consternation. 
The  timely  interposition  of  the  bank,  and  the  generous  assistance  of  the 
merchants,  prevented  many  of  the  expected  stoppages,  and  trade  appeared 
restored  to  its  former  security.  It  was,  however,  only  an  appearance ;  for, 
on  Monday,  the  22d  of  the  same  month,  may  be  read,  in  a  contemporary 
authority,  a  description  of  the  prevailing  agitation,  which  forcibly  reminds 
us  of  a  few  years  ago.  "  It  is  beyond  the  power  of  words  to  describe  the 
general  consternation  of  the  metropolis  at  this  instant.  No  event  for  fifty 
years  has  been  remembered  to  give  so  fatal  a  blow  to  trade  and  public 
credit.  An  universal  bankruptcy  was  expected.  The  stoppage  of  almost 
every  banker's  house  in  London  was  looked  for.  The  whole  city  was  in 
an  uproar.  Many  of  the  first  families  were  in  tears.  This  melancholy 
scene  began  with  a  rumor  that  one  of  the  greatest  bankers  in  London  had 
stopped ;  which  afterwards  proved  true.  A  report  at  the  same  time  was 
propagated  that  an  immediate  stop  of  the  greatest  must  take  place. 
Happily  this  proved  groundless;  the  principal  merchants  assembled,  and 
means  were  concerted  to  revive  trade  and  preserve  the  national  credit." 

The  resumption  of  payment  by  many  houses,  at  first  compelled  to  bend 
before  the  storm,  is  in  singular  contrast  with  the  following  event,  which 
took  place  in  France  three  years  previously.  The  extract  is  from  the 
"Gentleman's  Magazine."  "A  considerable  banker  at  Paris,  having  a 
draft  brought  to  him  from  a  public  office  in  that  city  for  a  large  sum, 
which  he  could  not  answer,  after  cramming  down  the  draft  into  a  loaded 
pistol,  called  to  the  gentleman  who  brought  it,  and  telling  him,  '  This, 
7 


94  History  of  the  Bank  of  England. 

Sir,  is  the  way  that  persons  who  have  no  money  pay  bills  that  are  due,' 
instantly  clapped  the  pistol  to  his  ear,  and  shot  himself  dead." 

Although  the  crisis  had  passed  in  England,  the  spirit  of  "  launching 
into  rash  and  boundless  projects  in  commerce,"  says  Macpiierson,  "  which 
were  to  be  supplied  by  artificial  credit,  and  the  madness  of  towering 
speculation  in  the  public  funds,  spread  all  over  Europe.  The  evil,  which 
had  reached  its  height  in  England  in  1772,*  burst  out  on  the  Continent 
in  the  end  of  that,  and  the  beginning  of  the  following  year,  with  such  an 
extensive  crash,  that  there  seemed  to  be  an  universal  wreck  of  credit 
throughout  Europe,  to  the  amount  of  ten  millions  sterling.  In  this  time 
of  general  distress,  a  happy  mixture  of  generosity  and  prudence  in  most 
leading  nations,  though  without  any  previous  concert,  averted  many  of 
the  fatal  consequences,  and  prevented  the  mischief  from  spreading.  The 
Dutch  merchants,  where  the  evil  was  greatest,  acted  with  their  usual  com- 
mercial Avisdom.  The  bank  of  Stockholm  gave  support  to  every  house 
of  real  responsibility;  and  the  Empress  of  Russia  gave  credit  to  the  Brit- 
ish merchants  at  Petersburgh,  by  giving  them  a  credit  on  her  own  banker, 
for  such  sums  as  they  needed."  The  cloud  soon  passed  away  for  the 
sunshine,  and  commercial  faith  took  the  place  of  commercial  distrust. 

It  is  worthy  of  notice  that  the  circumstances  to  which  allusion  has  been 
made,  were  the  first  instances  of  the  failures  of  bankers  in  London ;  and 
this  may  excite  wonder  when  it  is  seen,  by  the  following  extract  from 
"  Anderson's  History  of  Commerce,"  that  firms  often  traded  upon  capital 
somewhat  incommensurate  with  the  importance  of  their  transactions. 
"  At  the  breaking  up  and  dividing  the  profits  of  an  eminent  partnership, 
many  years  ago,  of  a  private  city  banldng-house,  which  for  many  years 
had  divided  a  profit  of  several  thousands,  on  valuing  all  the  real  stock  of 
the  partnership,  the  whole  did  not  amount  to  above  three  or  four  hun- 
dred pounds,  consisting  entirely  of  shop  instruments  and  furniture." 

In  this  year,  an  action,  interesting  to  the  public,  was  brought  against 
the  bank.  It  appeared  from  the  evidence  that  some  stock  stood  in  the 
joint  names  of  a  man  and  his  wife;  and,  by  the  rules  of  the  corporation, 
the  signatures  of  both  were  required  before  it  could  be  transferred.  To 
this  the  husband  objected;  and  claimed  the  right  of  selling  without  his 
wife's  signature  or  consent  in  any  form.  The  Court  of  King's  Bench  de- 
cided in  favor  of  the  plaintiff",  with  full  costs  of  suit ;  Lord  Mansfield  de- 
claring that  "  it  was  highly  cruel  and  oppressive  to  withhold  from  the 
husband  his  right  of  transferring."  The  words  italicized  were  unnecessary. 
One  object  of  the  bank  is  the  attainment  of  the  public  good.  It  is,  how- 
ever, a  prejudice  which  attaches  itself  to  juries — and  sometimes  even  to 
judges — to  view  with  jaundiced  eyes  the  proceedings  of  larga  corpora- 
tions; and  for  this  reason  the  verdicts  occasionally  given  are  only  com- 
patible with  a  very  small  reasoning  power,  or  a  very  extensive  vindictive 
feeling. 

In  l773,f  an  act  was  passed  making  it  death  to  copy  the  water-mark 

*  Among  the  events  of  the  year  were,  the  first  manufacture  of  calico,  in  Lan- 
cashire ;  the  use  of  passage  boats  on  the  Bridgewater  Canal,  and  the  establishment 
of  Lloyd's  Coffee  House,  I^ondon. 

■j-  The  exportation  of  cotton  machinery  was  this  year  prohibited.  The  Company 
of  British  Plate  Glass  Manufacturers  was  established  at  Kavenhcad,  Lancashire. 


Preservation  of  Credit — The  Gordon  Riots.  96 

of  the  bank  note  paper ;  and,  in  order  to  prevent  imitation,  it  was  enacted 
that  no  person  should  prepare  any  engraved  bill  or  promissory  note  con- 
taining the  words  "  Bank  of  England,"  or  "  Bank  post-bill,"  or  express- 
ing any  sum  in  white  letters  on  black  ground  in  resemblance  of  "  bank 
paper,"  under  the  penalty  of  imprisonment  for  six  months.  By  an  act, 
passed  in  1775,  notes  of  a  less  amount  than  twenty  shillings  were  prohib- 
ited; and  two  years  afterwards,  by  the  1 7th  George  III.,  the  amount 
was  limited  to  £5.* 

On  Friday,  the  2d  of  June,  1780,  commenced  those  riots  which  form 
so  disgraceful  a  portion  of  the  English  history,  and  which,  had  it  not 
been  for  the  resolute  daring  of  the  London  citizens,  might  have  been 
fatal  to  the  bank.  On  that  day,  a  large  body  of  men,  calling  themselves 
the  "  Protestant  Association,"  headed  by  Lord  George  Gordon,  a  no- 
bleman whom  some  termed  a  fanatic,  and  others  a  fool,  but  who  was,  in 
truth,  a  mixture  of  both,  with  the  great  merit  of  being  in  earnest,  assem- 
bled, about  half-past  two,  before  the  Houses  of  Parliament,  to  make  a 
demonstration  against  a  bill  in  favor  of  Catholicism,  then  in  progress, 
and  to  present  a  petition  against  it.  After  uttering  a  loud  shout,  more 
expressive  of  animal  strength  than  moral  power,  the  arbitrary  authority 
of  an  excited  populace  was  exercised.  They  obliged  the  members  of 
both  Houses  to  put  blue  cockades  in  their  hats,  and  to  call  out  "  No 
Popery."  Some  were  compelled  to  take  whatever  oaths  they  chose  to 
administer,  and  some  were  personally  abused  in  the  full  insolence  of  un- 
checked power.  Twice  they  attempted  to  force  an  entrance  into  the 
Senate  House.  The  Archbishop  of  York  was  saluted  with  hisses,  groans 
and  hootings.  Lord  Bathurst  was  kicked  and  Lord  Mansfield  buf- 
feted. The  watch  of  the  Duke  of  Northumberland  was  stolen  by  this 
*'■  No  Popery"  immaculate  mob.  The  gown  of  the  Bishop  of  Lichfield 
was  torn  off,  and  the  Bishop  of  Lincoln  was  compelled  to  escape  in  dis- 
guise. Lords  Townsiiend  and  Hillsborough  were  sent  into  Parliament 
without  those  important  appendages  of  gentlemen,  their  bags,  while  their 
hair,  hanging  loosely  in  unpicturesque  disorder  on  their  shoulders,  con- 
veyed a  vivid  picture  to  the  assembled  Senate  of  the  "  majesty  of  the 
people."  The  coach  of  Lord  Stormont  was  destroyed,  and  his  lordship 
only  saved  from  personal  damage  by  the  appeal  of  a  gentleman,  who 
harangued  the  mob  into  temporary  good  humor.  Lord  Boston  was  so 
long  in  the  power  of  the  populace,  that  the  peers,  with  some  remnant  of 
that  chivalric  feeling  which  bade  one  knight  couch  his  lance  against  a 
multitude,  proposed  to  sally  forth  to  the  rescue,  and  were  only  prevented 
by  his  lordship's  timely  escape  from  the  rudeness  of  the  rioters.  The 
mob,  after  finding  their  favorite  petition  rejected  by  the  large  majority  of 
192  to  6,  dispersed  to  various  quarters  of  the  town,  where  they  effected 
all  the  mischief  compatible  with  an  absence  of  danger. 

The  following  day,  Saturday,  was  comparatively  quiet;  but  on  Sun- 
day, acting  upon  the  proverb,  "the  better  the  day  the  better  the  deed," 
the  crowd  gave  vent  to  an  ignorant  fanaticism,  by  destroying  the  chap- 

*  The  two  brothers  Peereau  were  executed  for  forgery  in  1776.  Dr.  Dodd  was 
executed  June  27,  1777,  for  the  same  offence.  In  1777  the  Mont  de  Pi6t6,  at  Paris, 
wag  established. 


96  History  of  the  Bank  of  England. 

els  and  homes  of  the  Catholics,  The  insignia  of  the  worshippers  of  the 
ancient  faith  was  insulted,  the  pulpits  destroyed,  the  missals  burned,  and 
the  altars  desecrated.  Nor  did  they,  in  the  purity  of  their  Protestant- 
ism, forget  to  seize  the  images  of  silver  and  vessels  of  gold,  which  lay 
temptingly  exposed  to  view.  The  military  were  inactive,  and  the  magis- 
tracy ceased  to  be  a  terror  to  evil-doers. 

Scenes  such  as  these ;  the  reports  which,  from  time  to  time,  greatly 
alarmed  the  directors  of  the  bank ;  the  information  that  large  masses  of 
men,  uncontrolled  save  by  their  own  passions,  were  destroying  all  that 
they  approached,  must  have  greatly  affected  the  friends  of  the  corpora- 
tion. The  knowledge  that  the  military  were  useless ;  that  there  was  no 
efficient  power  to  protect  their  building  ;  that  an  application  for  a  regi- 
ment would  be  futile  ;  and  that,  therefore,  their  defence  must  rest  on 
their  resources,  greatly  added  to  their  responsibility. 

Monday  saw  tallow-chandlers'  shops  and  Catholic  chapels  alike  at- 
tacked. The  organs  of  destruction  were  in  active  play,  and  their  owners 
would  not  be  disappointed,  Tuesday  witnessed  the  military  out  to  pro- 
tect the  senators;  but  it  also  witnessed  a  peer  of  the  realm  wounded,  his 
carriage  demolished,  and  his  life  with  difficulty  saved.  The  cry  soon 
arose,  "  to  Newgate ;"  and  at  six  o'clock,  street,  square  and  lane  saw  ser- 
ried masses  of  fierce  and  desperate  men  rushing  to  the  work  of  destruc- 
tion. It  was  a  popular  cry.  Who,  among  that  wild  and  violent  crowd, 
did  not  hate  and  dread  the  very  name  ?  The  furniture  of  the  governor 
was  piled  in  a  heap  and  burned.  The  building  was  fired,  and  the  crimi- 
nals, made  worse  by  their  residence,  were  released  to  join  their  brethren 
in  crime.  From  Tyburn  to  Whitehall  the  shops  were  shut ;  business 
was  suspended  at  all  places,  save  the  bank ;  and  the  courts  of  law  were 
abandoned.  The  houses  of  Sir  John  Fielding  and  Justice  Cox  were 
destroyed.  The  children  of  the  prime  minister  were  taken  from  their 
beds  and  placed  on  the  table  of  the  horse-guards.  Fragments  of  the 
Catholic  chapels  w^ere  borne  in  triumphal  procession,  and  the  detenus  of 
the  new  prison  were  liberated.  The  elegant  mansion  of  Lord  Mansfield 
was  consumed,  and,  with  a  barbaric  contempt  of  literature,  his  library, 
the  labor  of  a  life,  was  thrown  into  the  flames,  while  three  hundred  sol- 
diers stood  calmly  by  and  witnessed  its  destruction.  As  the  day  closed, 
a  spectacle  almost  grand,  save  from  its  cause,  was  witnessed.  From 
prison  and  from  private  building — from  Catholic  chapel  and  Catholic 
dwelling-house — in  every  quarter  of  the  great  metropolis — rolled  clouds 
of  smoke,  from  which  pillars  of  fire  arose  with  a  sad  and  almost  solemn 
sublimity.  In  one  night  the  flames  of  six-and-thirty  fires  created  a  wild 
and  fearful  illumination. 

With  such  desolation  and  fury  reigning  unchecked,  the  Bank  of  Eng- 
land was  sure  to  feel  and  pay  for  its  importance.  It  is  only  to  be  at- 
tributed to  the  thoughtlessness  of  the  mob,  that  this  establishment  was 
not  attacked  when  the  defence  was  insufficient  for  its  protection.  When 
the  news  came  that  the  rioters,  headed  by  a  man  on  horseback,  capari- 
soned with  the  trophies  of  Newgate,  were  on  their  way,  the  governor 
was  absent ;  he  soon  reached  his  post,  however,  and  preparations  were 
made  for  their  reception. 

The  old  inkstands  were  cast  into  bullets ;  a  strong  force  was  placed 


The  City  after  the  Riots.  97 

within,  while  the  military  awaited  their  arrival  without  the  walls.  The 
officers  of  the  establishment  were  called  upon  to  assist,  and  another  force 
was  placed  on  the  roof,  to  fire  upon  the  assailants  if  they  entered.  Every 
possible  arrangement  was  made  for  the  defence  of  a  building,  far  more 
important  to  the  credit  of  the  country  than  any  in  the  capital.  If  the 
mob  could  have  penetrated  through  all  this  force,  the  loss  would  have 
been  immense.  But  the  citizens  of  London  had  formed  a  volunteer  corps ; 
and  with  the  military,  who  had  shaken  off  their  lethargy,  distinguished 
themselves  in  defending  the  bank.  When  the  rioters,  fierce  in  the  exer- 
cise of  their  mad  passions,  and  fierce  in  the  possession  of  uncontrolled 
power,  saw  the  display  made  by  the  directors,  their  attacks  were  feebly 
conducted.  It  was  one  thing  to  destroy  an  unresisting  Catholic  gentle- 
man's property ;  it  was  another  to  attack  a  body  of  resolute  men.  It 
was  one  thing  to  fire  a  prison,  and  another  to  receive  the  fire  of  disciplined 
soldiers.  "Wilkes  is  said,  on  this  occasion,  to  have  rushed  out  during 
the  pauses  which  occurred  in  the  attack,  and  dragged  some  of  the  ring- 
leaders from  their  fellow-rabble.  A  witness  of  the  scene  says,  "When 
the  ministers  trembled  and  remained  inactive ;  when  the  magistrates  durst 
not  venture  out  of  their  houses,  he  was  seen  presenting  himself  before 
that  unprincipled  rabble,  and  braving  death  in  order  to  preserve  the 
bank,  which  they  were  about  to  pillage.  Prayers,  representations  and 
threats  he  successfully  made  use  of,  and  even  carried  his  intrepidity  so 
far  as  to  seize  some  of  the  ringleaders.  This  bold  and  patriotic  action, 
in  such  circumstances,  restored  to  him  the  favor  of  his  sovereign,  who 
had  borne  him  for  twenty  years  a  mortal  hatred."  It  is  added,  that 
Wilkes  received  the  thanks  of  the  council  for  his  conduct  during  the 
riots.  The  first  fire  of  the  military  repulsed  the  mob  ;  their  second  at- 
tempt was  unsuccessful ;  nor  did  they  hazard  a  third.  Several  were 
killed  and  many  wounded  in  the  skirmish. 

"  Had  the  bank,"  says  the  Annual  Register,  "  been  the  first  object  of 
their  fury,  there  can  be  little  doubt  but  that  they  would  have  succeed- 
ed ;  and  what  the  consequence  would  have  been,  let  any  rational  mind 
figure  to  itself." 

It  seems,  indeed,  little  short  of  a  miracle,  that  a  place  like  the  bank 
should  have  been  so  long  relieved  from  attack.  It  was  probably  owing  to  a 
want  of  organization  among  the  rioters  ;  for  a  leader,  who  failed  to  obtain 
possession  of  the  sinews  of  war,  must  have  been  very  unworthy  the  name. 
At  any  rate,  it  was  a  remarkable  salvation  of  private  property  and  public 
credit.  But  the  most  vivid  representation  of  the  danger  which  the  Bank 
of  England  had  happily  escaped,  is  to  be  found  in  the  following  particu- 
lars of  the  appearance  of  the  city  after  the  riots.  *'  The  metropolis  pre- 
sented in  many  places  the  image  of  a  city  recently  stormed  and  sacked ; 
all  business  at  an  end  ;  houses  and  shops  shut  up  ;  the  Royal  Exchange, 
public  buildings  and  streets  possessed  and  occupied  by  the  troops  ;  smok- 
ing and  burning  ruins,  with  a  dreadful  void  and  silence,  in  scenes  of  the 
greatest  hurry,  noise  and  business."  The  cause  of  all  this  riot,  the  scion  of 
the  ducal  house  of  Gordon,  proved  the  durability  of  his  love  for  Protest- 
antism, by  professing  the  Hebrew  faith  ;  his  last  hours  embittered  by 
the  dread  of  his  remains  being  interred  in  any  other  than  the  sepulchres 
of  the  ancient  people  of  Israel. 


98  History  of  the  Bank  of  England. 

"Since the  clanger  wbicli  the  bank  so  happily  escaped,  a  military  force 
has  been  placed  nightly  in  the  interior  of  the  establishment.  A  dinner 
is  provided  for  the  officer  on  guard  and  two  friends.  A  snug,  plain, 
excellent  dinner  it  is,"  says  Mr.  AVeir,  in  "  Knight's  Pictorial  London," 
"  brought  daily  from  one  of  the  best  taverns  in  the  neighborhood.  The 
store  which  the  guards  set  by  this  dinner,  excellent  though  it  be,  speaks 
volumes  for  the  ennui  which  broods  over  the  period  during  which  they 
are  stationed  at  the  Tower.  Some  time  ago,  a  regiment  of  tlie  line  was 
marched  into  the  Tower,  and  the  battalion  of  guards  withdrawn.  All 
the  other  duties  of  the  place  were  gladly  and  unreluctantly  given  up  to 
the  new  comers,  with  the  solitary  exception  of  the  inlying  piquet  at  the 
bank.  The  duty  might  have  been  given  up,  but  to  relinquish  the  dinner 
was  impossible.  And,  on  this  account,  so  long  as  the  Tower  remained 
denuded  of  the  presence  of  the  guards,  the  bank  piquet  regularly  detailed 
from  the  far  west  end,  duly  and  daily  threaded  the  crowded  Strand, 
passed  under  Temple  Bar,  jostled  over  Fleet-street,  scrambled  up  Lud- 
gate  Hill,  rounded  St.  Paul's,  and  over  Cheapside,  erst  the  scene  of 
tournaments,  charged  home  to  the  Bank  of  England.  The  cynosure  of 
attraction  to  the  weary  sub  on  duty — the  magnet  which  drew  him  to 
encounter  this  long  and  toilsome  march,  and  worse,  the  incarceration  of 
four-and-twenty  mortal  hours  within  the  walls  of  the  bank,  was  not  the 
ingots  piled  within  these  walls — his  high  spirit  disdained  them  ;  not  the 
bright  eye  of  city  maid  or  dame,  these  must  now  be  sought  in  the  sub- 
urbs ;  it  was  the  substantial  savory  fare  of  the  city — the  genuine  roast 
beef  of  Old  England,  and  the  city's  ancient  port,  far  surpassing  the  French 
cookery  and  French  wine  of  St.  James'." 

The  proclamation  of  peace  in  1783  was  indirectly  an  expense  to  the 
bank,  although  hailed  with  enthusiasm  by  the  populace.  The  war  with 
America  had  assumed  an  aspect  which,  with  all  thinking  men,  crushed 
every  hope  of  conquest.  It  was,  therefore,  amid  a  general  shout  of  joy, 
that  on  Monday,  1st  October,  1783,  the  ceremonial  took  place.  A  vast 
multitude  attended,  and  the  people  were  delighted  with  the  suspension 
of  war.  The  concourse  was  so  great  that  Temple  Bar  was  opened  with 
difficulty,  and  the  Lord  Mayor's  coachman  was  kept  one  hour  before  he 
was  able  to  turn  his  vehicle.  The  bank  only  had  reason  to  regret,  or  at 
least  not  to  sympathize  so  freely,  with  the  public  joy.  During  the  hurry 
attendant  on  the  proclamation  of  the  Royal  Exchange,  when  it  may  be 
supposed  the  sound  of  the  music  and  the  noise  of  the  trumpet  occupied 
the  attention  of  the  clerk  more  than  was  beneficial  for  the  interest  of  his 
employers,  fourteen  notes,  of  £50  each,  were  presented  at  the  office,  and 
cash  paid  for  them.  The  next  day  they  were  found  to  be  forged,  and 
there  was  no  mode  of  discovering  the  person  who  had  defrauded  the 
establishment. 

The  losses  occurring  to  the  bank  from  forged  notes  and  other  fraudu- 
lent documents  were  commensurate  with  the  greatness  of  its  transactions. 
Many  of  these  were  mixed  up  with  much  of  the  romance  of  life ;  the 
attempts  of  some  were  successful  through  great  good  fortune ;  others 
were  detected  at  once  ;  while  many,  by  their  dexterity,  either  defied  dis- 
covery or  baffled  the  bank  for  years.  It  is  one  of  the  latter  which  will 
now  be  related.     Constant  references  are  made  in  the  journals  of  the 


Attempts  at  Detection — Disguise  of  the  Former.  99 

time  to  some  untnown  power  which  defrauded  the  Bank  of  England ;  of 
some  mysterious  agent  who  laughed  at  precautions  and  escaped  exposure; 
of  new  modes  of  robbery  which,  from  time  to  time,  startled  alike  both 
clerks  and  directors.  Such  is  the  story  now  to  be  related  ;  too  dramatic 
for  the  stage,  and  too  startling  for  an  appearance  of  probability, 

Charles  Price  was  one  of  those  men  whose  whole  abilities  are  em- 
ployed in  defrauding.  At  the  age  of  seventeen  he  left  his  home  to  seek 
a  fortune,  and  threw  himself  on  the  world  with  the  determination  to  live 
by  it.  He  soon  learned  to  play  many  parts  ;  now  a  comedian  ;  and  now 
a  gentleman's  servant.  At  one  time  a  rogue,  and  the  companion  of 
rogues  ;  and  then  a  fraudulent  brewer  or  a  fraudulent  bankrupt.  Great 
talent  was  employed  in  enormous  crimes ;  and  great  evil  was  the  result. 
After  trying  his  hand  as  lottery-office  keeper,  stock  broker  and  gambler, 
be  attained  sufficient  importance  to  grace  a  work  entitled,  "The  Swin- 
dlers' Chronicle."  From  this  the  step  was  easy  to  the  "Newgate  Calen- 
dar," and  he  embarked  in  a  bold,  skilful  and  resolute  career  of  fraud  on 
the  bank.  His  only  confidant  was  his  mistress.  He  practised  engraving 
till  he  became  proficient.  He  made  his  own  ink.  He  manufactured  his 
own  paper.  With  a  private  press  he  worked  his  own  notes,  and  he 
counterfeited  the  signatures  of  the  cashiers,  until  the  resemblance  was 
complete.  Master  of  all  that  could  successfully  deceive,  he  defied  alike 
fortune  and  the  bank  directors ;  and  even  these  operations  in  his  own 
house  were  transacted  in  a  disguise  sufficient  to  baffle  the  most  pene- 
trating. 

About  the  year  1780,*  a  note  was  brought  to  the  bank  for  payment. 
So  complete  were  all  its  parts,  so  masterly  the  engraving,  so  correct  the 
signatures,  so  skilful  the  water-mark,  that  it  was  promptly  paid  ;  and  only 
discovered  to  be  a  forgery  when  it  reached  a  particular  department. 
From  that  period  forged  paper  continued  to  be  presented,  especially  at 
the  time  of  lottery  drawing.  Consultations  were  held  with  the  police. 
Plans  were  laid  to  insure  detection.  Every  effort  was  made  to  trace  the 
forger.  Clarke,  the  Forrester  of  his  day,  went,  like  a  sluth-hound,  on 
the  track ;  for  in  those  days  the  expressive  word  "  blood-money"  was 
known.  Up  to  a  certain  point  there  was  little  difficulty ;  but  beyond 
this  the  most  consummate  art  defied  the  ingenuity  of  the  officer.  In 
whatever  way  the  notes  came,  the  train  of  discovery  always  paused  at  the 
lottery-offices.  Advertisements  offering  large  rewards  were  circulated ; 
but  the  unknown  forger  baffled  detection,  at  the  expense  of  the  corpo- 
ration. 

Among  other  advertisements  in  the  "  i>a^7y  Advertiser,''''  in  1780, 
might  be  seen  one  for  a  servant ;  to  which  an  answer  was  sent  by  a  young 
man,  in  the  employment  of  a  musical  instrument-maker,  who,  some  time 
after,  was  called  upon  by  a  coachman,  and  informed  that  the  advertiser 
was  waiting  in  a  coach  to  see  the  candidate  for  the  situation.  The  young 
man  went,  and  was  desired  to  enter  the  conveyance,  where  he  saw  a  per- 
son with  something  of  the  appearance  of  a  foreigner,  sixty  or  seventy 
years  old,  apparently  troubled  with  the  gout,  as  some  yards  of  flannel 

*  A  lottery  this  year  was  granted  to  raise  £12,000,000.  The  exportation  of 
woollen  goods  from  Ireland  was  this  year  permitted. 


100  History  of  the  Bank  of  England. 

were  wrapped  around  his  legs,  A  camlet  surtout  was  buttoned  round 
his  mouth  ;  a  large  patch  placed  over  his  left  eye  ;  and  nearly  every  part 
of  his  face  was  concealed.  He  affected  much  infirmity,  and  a  faint  hectic 
cough ;  and  invariably  presented  the  patched  side  to  the  view  of  the 
servant.  After  some  conversation,  in  the  course  of  which  he  represented 
himself  as  guardian  to  a  young  nobleman  of  great  fortune,  the  interview 
concluded  with  the  engagement  of  the  applicant,  and  the  new  servant 
was  directed  to  call  on  Mr.  Brank — the  name  by  which  he  designated 
himself — at  29  Titchfield-street,  Oxford-street. 

At  this  interview  Brank  inveighed  against  his  whimsical  ward  for  his 
love  of  speculating  in  lottery-tickets,  and  told  the  servant  that  his  princi- 
pal duty  would  be  to  purchase  them.  After  one  or  two  meetings,  at 
each  of  which  Brank  kept  his  face  muffled,  he  handed  a  £40  and  £20 
bank  note ;  told  the  servant  to  be  very  careful  not  to  lose  them ;  and 
directed  him  to  buy  lottery-tickets  at  separate  offices.  The  young  man 
went,  fulfilled  his  instructions,  and  at  the  moment  he  was  returning,  was 
suddenly  called  by  his  employer  from  the  other  side  of  the  street,  con- 
gratulated on  his  rapidity,  and  then  told  to  go  to  various  offices  in  the 
neighborhood  of  the  Royal  Exchange,  and  purchase  more  shares.  To 
do  this,  £400  in  Bank  of  England  notes  were  handed  him,  and  the  wishes 
of  the  mysterious  Mr.  Brank  were  satisfactorily  effected.  These  scenes 
were  continually  enacted.  Notes  to  a  large  amount  were  thus  circulated  ; 
lottery-tickets  purchased ;  and  Mr.  Brank,  always  in  a  coach,  with  his 
face  studiously  concealed,  ready  on  the  spot  to  receive  them.  The  sur- 
prise of  the  servant  was  somewhat  excited  ;  but  had  he  known  that  from 
the  period  he  left  his  master  to  purchase  the  tickets,  one  female  figure 
accompanied  all  his  movements ;  that  when  he  entered  the  offices,  it 
waited  at  the  door,  peered  cautiously  in  at  the  window,  hovered  around 
him  like  a  second  shadow,  watched  him  carefully,  and  never  left  him 
until  once  more  he  was  in  the  company  of  his  employer,  that  surprise 
would  have  been  greatly  increased. 

Again  and  again  were  these  extraordinary  scenes  rehearsed  ;  again  and 
again  were  lottery-tickets  procured  ;  and  again  and  again  was  the  ser- 
vant allowed  only  to  see  the  patched  side  of  his  master's  face.  At  last 
the  bank  obtained  a  clue,  and  the  servant  was  taken  into  custody,  his 
simple  statement  disregarded,  and  his  person  incarcerated.  The  direct- 
ors imagined  that  at  last  they  had  secured  the  actor  in  so  many  parts ; 
that  the  flood  of  forged  notes  which  had  inundated  the  establishment 
would  cease.  Their  hopes  proved  fallacious,  and  it  was  found  that  "  old 
Patch"  had  been  sufficiently  clever  to  baffle  the  bank  directors.  The 
house  in  Titchfield-street  was  searched  ;  but  Mr.  Brank  had  deserted 
it.  The  servant  was  discharged  from  custody,  with  a  present  of  £20 ; 
the  advertisements  re-appeared  ;  rewards  were  again  freely  oflfered  ;  but 
in  vain.  The  extraordinary  Mr.  Brank  remained  as  inaccessible  as  ever, 
and  the  forgeries,  as  usual,  became  more  plentiful  about  the  period  of 
the  lotteries. 

But  the  mind  of  this  man — a  master  in  the  art  of  crime — invented  a 
new  method  of  fraud.  In  1785  the  public  prints  report  the  following: 
"  On  the  iVth  of  December  £10  was  paid  into  the  bank,  for  which  the 
clerk,  as  usual,  gave  a  ticket  to  receive  a  bank  note  of  equal  value.    This 


Morland,  the  Painter.  101 

ticket  ought  to  have  been  carried  immediately  to  the  cashier;  instead  of 
which,  the  bearer  took  it  home,  and  curiously  added  an  0  to  the  original 
sum,  and,  returning,  presented  it,  so  altered,  to  the  cashier,  for  which  he 
received  a  note  of  £100.  In  the  evening,  the  clerks  found  a  deficiency 
in  the  accounts,  and,  on  examining  the  tickets  of  the  day,  not  only  that, 
but  two  others,  were  discovered  to  have  been  obtained  in  the  same  man- 
ner. In  the  one,  the  figure  1  was  altered  to  4,  and  in  another,  to  5  ;  by 
which  the  artist  received,  upon  the  whole,  near  £1,000."  The  contriver 
of  this  ingenious  fraud  proved  to  be  the  same  individual  who  had  so  long 
baffled  the  police  ;  but  in  a  short  time  his  career  was  closed.  One  of 
the  notes,  given  in  pledge  for  costly  articles  of  plate,  with  Avhich  he 
graced  expensive  entertainments,  was  traced  to  the  silversmith,  and,  after 
innumerable  names,  innumerable  lodgings,  and  innumerable  disguises, 
the  end  of  Charles  Price  was  fast  approaching.  With  great  ingenuity 
he  procured  the  destruction  of  his  implements,  through  the  agency  of 
his  mistress,  notwithstanding  the  acuteness  of  the  police.  The  as- 
surance of  this  man,  in  the  safety  of  his  transformations,  had  been 
complete. 

It  has  been  said  that  his  accomplice  in  crime  watched  the  person  he 
employed,  while  Price  was  waiting  close  to  the  spot.  Had  any  sus- 
picious appearance  occurred  at  the  lottery-office,  she  would  immediately 
have  given  a  signal  to  Price,  who  would  have  torn  off  his  dress  as  old 
Patch,  and  appeared  in  his  own  character.  He  seems  to  have  been 
thoroughly  known  as  "  Patch,"  (from  the  covering  over  his  eye,)  but  his 
identity  with  Price,  the  lottery-office  keeper  and  stock-jobber,  was  not 
suspected.  His  end  was  worthy  his  life.  He  employed  his  son  to  pro- 
cure the  necessary  implements  of  destruction,  and,  on  the  following 
morning,  he  was  found  hanging.  A  jury  sat  upon  the  body — on  which 
the  old  barbaric  custom  was  enacted — and  midnight  witnessed  the  lonely 
cross-road  receive  the  remains  of  the  forger. 

The  desire  of  the  directors  to  discover  the  makers  of  forged  notes  pro- 
duced a  considerable  amount  of  anxiety  to  one  whose  name  is  indelibly 
associated  with  British  art.  George  Morland — a  name  rarely  men- 
tioned but  with  feelings  of  admiration  and  regret — had,  in  his  eagerness 
to  avoid  incarceration  for  debt,  retired  to  an  obscure  hiding-place,  in  the 
suburbs  of  London.  The  description  of  Allan  Cunningham  is  vivid. 
"  On  one  occasion,"  says  this  biographer,  "  he  hid  himself  in  Hackney, 
where  his  anxious  looks  and  secluded  manner  of  life  induced  some  of  his 
charitable  neighbors  to  believe  him  a  maker  of  forged  notes.  The  di- 
rectors of  the  bank  despatched  two  of  their  most  dexterous  emissaries  to 
inquire,  reconnoitre,  search  and  seize.  The  men  arrived,  and  began  to 
draw  lines  of  circumvallation  round  the  painter's  retreat.  He  was  not, 
however,  to  be  surprised ;  mistaking  those  agents  of  evil  mien  for 
bailiffs,  he  escaped  from  behind  as  they  approached  in  front,  fled  into 
Hoxton,  and  never  halted  till  he  had  hid  himself  in  London.  Nothing 
was  found  to  justify  suspicion  ;  and  when  Mrs.  Morland,  who  was  his 
companion  in  this  retreat,  told  them  who  her  husband  was,  and  showed 
them  some  unfinished  pictures,  they  made  such  a  report  at  the  bank, 
that  the  directors  presented  him  with  a  couple  of  bank  notes  of  twenty 
pounds  each,  by  way  of  compensation  for  the  alarm  they  had  given  him." 


102  History  of  ilte  Bank  of  England. 


CHAPTER    XI. 

LEGAL    OPINION ABOLITION    OF  TALLIES FORGERY EXTENSION    OF   THE    CHARTER OPIN- 
IONS   OF    LORD    NORTH INCREASE    OF    CAPITAL LEGAL    DECISION     CONCERNING     FORGED 

NOTES — STAMP     DUTIES NATIONAL     DEBT CURIOUS    ANECDOTES FRAUD    AND    FORGERY 

UNCLAIMED    DIVIDENDS DISTRESS    OF    1793 ISSUE    OF    EXCHEQUER    BILLS LOYALTY 

LOAN. 

Up  to  the  year  1780,  bank  stock  was  transferred  to  legatees  without 
the  interposition  of  executors.  The  opinion  of  Lord  Eldon  seems  unde- 
cided as  to  the  justice  of  altering  this  arrangement.  "I  have  always 
doubted,"  he  said,  "  whether  the  legislature,  who  meant  to  give  a  pecu- 
liar value  to  stock  in  the  life  of  the  party,  did  not  also  mean  that  he 
should  have  the  power  of  devising  it ;  and  that  it  should  go  to  the  devi- 
see, not  through  the  executor  or  administrator,  but  by  the  effect  of  the 
devise ;  and  that  it  should  go  to  the  executor  or  administrator  only  in 
fault  of  the  devise  directed  by  the  statute."  It  is  now  settled  that  it 
passes  to  the  executor,  the  assent  of  whom  is  necessary  before  the  lega- 
tee can  receive. 

In  1783  an  act  was  passed  which  arranged  for  the  abolition  of  tallies. 
The  word  has  been  so  often  used,  that  the  following  description  may  not 
prove  uninteresting :  "  A  tally  is  a  cleft  piece  of  wood,  used  to  score  an 
account  upon  by  notches,  and  was  given  at  the  exchequer  to  those  who 
pay  money  there  upon  loans.  Another  part  was  called  the  counterfoil,  or 
counter-stock,  and  was  kept  by  an  officer  of  the  exchequer.  The  first 
contractors  were  authorized  to  transfer  their  interest  by  endorsements  on 
these  tallies,  and  the  endorsements  were  entered  in  the  bank  books.  The 
entries  in  the  books  were  only  to  inform  the  government  to  whom  the 
dividends  were  payable,  the  right  of  these  persons  depending  on  the 
tally."  The  act  passed  in  1783  abolished  tallies  for  a  better  method  of 
transacting  business,  and  they  are  now  only  known  by  tradition. 

The  notes  of  a  banking  establishment  are  always  liable  to  imitation  ; 
and  as  the  paper  of  a  national  bank  circulates  as  freely  as  coin,  it  is  not 
surprising  that  men  of  desperate  hopes  have  successfully  attempted  to 
gain  by  fraud  that  which  they  were  denied  by  fortune.  From  time  to 
time  the  public  records  bear  testimony  to  this  ;  and  so  numerous  did  the 
forgeries  become,  that  it  will  be  only  the  more  important  or  the  more 
curious  with  which  the  patience  of  the  reader  will  be  tried. 

John  Mathison  was  a  man  of  great  mechanical  capacity,  who,  becom- 
ing acquainted  with  an  engraver,  unhappily  acquired  that  art  which  ulti- 
mately proved  his  ruin.  A  yet  more  dangerous  qualification  was  his  of 
imitating  signatures  with  inconceivable  accuracy.  Tempted  by  the  hope 
of  sudden  wealth,  his  first  forgeries  were  the  notes  of  the  Darlington 
Bank.  This  fraud  Avas  soon  discovered  ;  and  a  reward  being  off"ered,  with 
a  description  of  his  person,  he  escaped  to  Scotland.  There,  scorning  to 
let  his  talents  lie  idle,  he  counterfeited  the  notes  of  the  Royal  Bank  of 


Detection  of  the  Forger.  103 

Scotland,  amused  himself  by  negotiating  them  during  a  pleasure  excur- 
sion through  the  country,  and  reached  London,  supported  by  his  imitative 
talent.  Here  a  fine  sphere  opened  for  his  genius,  which  was  so  active, 
that  in  twelve  days  he  had  bought  the  copper,  engraved  it,  fabricated 
notes,  forged  the  water-marlc,  printed  and  negotiated  several.  When  he 
had  a  sufficient  number,  he  travelled  from  one  end  of  the  kingdom  to  the 
other,  disposing  of  them.  Having  been  in  the  habit  of  procuring  notes 
from  the  bank,  (the  more  accurately  to  copy  them,)  he  chanced  to  be 
there  when  a  clerk  from  the  excise  office  paid  in  7,000  guineas,  one  of 
which  was  scrupled.  Mathison,  from  a  distance,  said  it  was  a  good  one. 
"  Then,"  said  the  bank  clerk,  on  the  trial,  "  I  recollected  him." 

The  frequent  visits  of  Mathison,  who  was  very  incautious,  together 
with  other  circumstances,  created  some  suspicion  that  he  might  be  con- 
nected with  those  notes,  which,  since  his  first  appearance,  had  been  pre- 
sented at  the  bank.  On  another  occasion,  when  Mathison  was  there,  a 
forged  note  of  his  own  was  presented,  and  the  teller,  half  in  jest  and  half 
in  earnest,  charged  Maxwell,  the  name  by  which  he  was  known,  with 
some  knowledge  of  the  forgeries.  Further  suspicion  was  excited,  and 
directions  were  given  to  detain  him  at  some  future  period.  The  follow- 
ing day,  the  teller  was  informed  that  "  his  friend  Maxwell,"  as  he  was 
styled  ironically,  was  in  Cornhill.  The  clerk  instantly  went ;  and  under 
the  pretence  of  having  paid  Mathison  a  guinea  too  much  on  a  previous 
occasion,  and  of  losing  his  situation  if  the  mistake  were  not  rectified  by 
the  books,  induced  him  to  return  with  him  to  the  hall ;  from  which  place 
he  was  taken  before  the  directors,  and  afterwards  to  Sir  John  Fielding. 
To  all  the  inquiries  he  replied,  "  He  had  a  reason  for  declining  to  an- 
swer. He  was  a  citizen  of  the  world,  and  knew  not  how  he  had  come  into 
it,  or  how  he  should  go  out  of  it."  Being  detained  during  a  consulta- 
tion with  the  bank  solicitor,  he  suddenly  lifted  up  the  sash,  and  jumped 
out  of  the  window.  On  being  taken  and  asked  his  motive,  if  innocent, 
he  said  "it  was  his  humor." 

In  the  progress  of  the  inquiry,  the  Darlington  paper,  containing  his 
description,  was  read  to  him,  when  he  turned  pale,  burst  into  tears,  and 
saying  he  was  a  dead  man,  added,  "  now  I  will  confess  all."  He  was, 
indeed,  found  guilty  only  on  his  own  acknowledgment,  which  stated  he 
could  accomplish  the  whole  of  a  note  in  one  day.  It  was  asserted  at  the 
time,  that,  had  it  not  been  for  this  confession,  he  could  not  have  been  con- 
victed. He  off"ered  to  explain  the  secret  of  his  discovery  of  the  water- 
mark, provided  the  corporation  would  spare  his  life  ;  but  his  proposal  was 
rejected,  and  he  paid  the  penalty  of  his  crime. 

The  charter  of  the  company,  being  within  five  years  of  its  expiration, 
was  discussed  in  1781.  The  experience  of  years  had  proved  that  the  re- 
newal of  the  privileges  was  only  to  be  obtained  by  payment.  The  min- 
istry of  1781  were  not  likely  to  be  less  urgent  than  their  predecessors. 
The  position  of  Great  Britain,  also,  was  somewhat  precarious.  Mr. 
Alison  says  of  the  period  :  "  French  diplomacy  acquired  the  lead  in 
Europe ;  the  dreams  of  the  philosopher  were  exchanged  for  the  skilful 
combinations  of  experienced  statesmen.  Eussia,  Sweden,  Denmark  were 
united  in  a  hostile  league;  America,  Spain  and  France  in  an  armed  con- 
federacy against  Great  Britain.     The  combined  fleets  rode  triumphant 


104  History  of  the  Bank  of  England. 

in  the  British  channel ;  and  however  strange  it  may  sound  to  modern 
ears,  it  is  historically  true,  that  England  was  more  nearly  subdued  by  the 
wisdom  of  Louis  XVI.  and  the  talent  of  Vkrgennes  than  by  the  genius 
of  Napoleon  and  the  address  of  Talleyrand."  To  maintain  such  a 
war  money  was  absolutely  necessary,  and  once  more  the  authorities  were 
called  on  to  bargain  with  a  necessitous  State.  The  first  charter  had  been 
expressly  granted  by  William,  in  return  for  the  loan  of  £1,200,000. 
On  its  extension,  in  1697,  no  payment  was  asked  in  return.  The  services 
of  the  bank  were  felt  because  they  were  novel ;  and  they  were  acknow- 
ledged because  they  were  felt.  The  great  financier  of  that  day,  Mr. 
Montesquieu,  with  the  "  wise  Lord  Godolpiiin,"  were,  in  the  first  flush 
of  gratitude,  sufficiently  honest  tcr  enunciate  a  principle,  which  they 
were  equally  honest  to  act  upon.  They,  with  other  great  men  of  the 
day,  declared,  in  1696,  "that  the  establishment  and  prosperity  of  the 
bank  were  so  much  a  national  benefit,  that  they  were  of  opinion  that  no 
fine  ought  to  be  expected  for  a  renewal,  but  that  the  company  should  al- 
ways be  supported  and  cherished  by  the  public."  The  directors  had 
learned  by  experience,  however,  that  statesmen's  views,  like  lover's  vows, 
are  mutable.  The  terms  they  proposed  for  an  extension  of  the  charter, 
for  twenty-five  years,  were  a  loan  of  two  millions  for  three  years,  at  three 
per  cent.  Vehement  opposition  was  the  result.  Some  objected  to  the 
amount  of  payment ;  others  resisted  the  principle  of  a  renewal.  It  is, 
indeed,  surprising,  that  so  moderate  an  offer  was  accepted.  The  remarks 
of  Lord  North,  however,  betray  how  much  the  money  was  required. 
"  I  propose  to  pay  off  two  millions  of  navy  debt  with  the  two  millions 
now  offered ;  a  debt  which  has  ever  hung  like  a  millstone  round  the 
neck  of  public  credit."  The  whole  of  this  speech  is  worth  recording, 
for  it  marks,  in  strong  and  energetic  language,  the  opinion  which  this 
statesman  entertained  of  the  services  of  the  corporation.  "  The  bank,  by 
prudent  management,  by  judicious  conduct,  wise  plans,  and  punctuality 
in  establishing  its  credit,  had  contributed  very  essentially  to  promote 
national  credit;  a  matter  equally  advantageous  to  this  country  at  home 
and  abroad.  It  might  be  said  by  some,  if  the  present  banking  company 
will  not  give  more  institute  a  new  company.  They  knew  not  the  solid 
advantages  resulting  to  the  public  from  its  connection  with  the  present 
company.  They  were  not  aware  of  the  dreadful  consequences  that  might 
attend  the  attempt  to  incorporate  a  new  one.  And  were  it  possible, 
how  materially  might  the  national  credit  be  affected,  from  many  years 
elapsing  before  a  new  company  could  establish  its  character  and  credit 
in  so  eminent  a  degree  as  the  present  bank.  So  dreadful  would  be  the 
consequence  of  breaking  up  the  present  bank,  that  he  hoped  never  to  hear 
of  a  new  company.  From  being  the  banker  of  the  public,  the  bank  un- 
doubtedly derived  advantages  ;  but  the  public  derived  advantages  equally 
considerable  from  the  important  accommodation  which  the  bank  afforded. 
It  had  given  him  great  satisfaction  to  hear  that,  in  consequence  of  the 
bargain  being  in  agitation,  not  a  navy  bill  was  to  be  bought ;  if  so,  it 
had  already  produced  one  great  effect." 

Sir  George  Saville  said,  that  "  the  noble  lord  had  spoken  of  the 
connection  between  the  public  and  the  bank  as  if  he  had  been  describing 
conjugal  love,  and  enlarging  upon  the  affection  of  a  man  and  his  wife. 


Increase  of  Dividend — Legal  Decision.  105 

He  desired  to  know  if  the  public  were  about  to  take  a  new  wife  ;  whether 
it  was  fair  to  say  your  great-grandfather  married  the  great-grandmother 
of  the  young  lady  without  a  fortune ;  your  grandfather  also  married  her 
grandmother  without  a  fortune  ;  your  father  married  her  mother  with  a 
small  fortune ;  and  therefore  you  ought  to  marry  the  daughter  with  a 
very  trifling  increase  of  portion  ?  It  was  much  fairer  for  the  public  to 
say,  'Aye,  indeed,  were  my  ancestors  so  improvident?  I  will  not  copy 
their  example.  The  young  lady's  father  is  grown  rich ;  he  can  afford  to 
give  his  daughter  a  good  fortune,  and  a  good  fortune  I  will  have,  or  I 
"will  not  marry  the  young  lady.' " 

Mr.  Ewer,  governor  of  the  bank,  declared  that  the  proposition  of  the 
directors  was  such  as  he  could  meet  on  public  ground.  He  thought  the 
bank  offered  fairly  and  handsomely  when  they  tendered  the  public  a  loan 
of  two  millions,  at  three  per  cent,  interest,  for  three  years. 

After  some  further  debates  the  proposals  of  the  bank  were  accepted ; 
and  the  bill  renewing  the  charter  for  twenty-six  years  passed  into  a  law. 
In  1781*  a  general  court  was  held  at  the  bank  to  inform  the  proprietors 
that  government  had  consented  to  renew  the  charter  on  the  terms  stated  ; 
and  in  the  same  year  the  proprietors  held  a  general  meeting  to  determine 
the  question  of  increasing  the  dividend  from  five  and  a  half  to  six  per 
cent.  It  may  be  assumed  that  this  was  against  the  wishes  of  the  direc- 
tors, as  it  was  carried  by  ballot.  On  the  following  day  they  met  to  con- 
firm the  vote,  and  to  make  a  call  of  eight  per  cent,  on  the  capital,  which 
■was  thus  increased  to  £11,642,400.  A  new  question  arose  this  year, 
and  was  tried  by  a  special  jury  before  Lord  Mansfield.  From  the  period 
of  the  first  forgery  the  paper  of  the  Bank  of  England  had  been  abund- 
antly imitated.  The  legal  liability  of  the  directors  to  cash  these  notes 
soon  became  an  important  point ;  and  a  case  was  tried  in  which,  though 
it  was  proved  that  the  cashiers'  names  were  so  artfully  copied  that  it  was 
almost  as  difficult  to  own  as  to  deny  them,  yet,  being  also  proved  that 
the  notes  for  which  payment  was  sought  had  not  been  issued  by  the 
bank,  a  verdict  was  given  which  effectually  destroyed  the  hopes  of  those 
who  held  them.  It  appears  strange  that  any  one  could  be  found  to  press 
such  a  claim.  We  believe  that  the  directors  of  the  Bank  of  Austria  pay 
without  demur  the  notes  forged  in  imitation  of  those  issued  by  them. 
But  this  must  be  a  question  of  policy,  and  not  of  justice,  as  it  is  impos- 
sible to  contend  that  the  managers  of  any  bank  should  pay  notes  which 
are  formed  out  of  their  establishment,  which  do  not  bear  the  signatures 
of  their  officers,  and  for  which  they  have  received  no  consideration. 

An  act  for  enlarging  the  stamp  duties  was  passed  in  June,  1783.  By 
this  the  notes  and  bills  of  the  bank  were  exempted  from  its  operation,  in 
consequence  of  the  company  engaging  to  pay  £12,000  yearly  for  the 
privilege;  the  government  allowance  of  £562  10s.  per  million,  for  man- 
aging the  national  debt,  was  reduced  to  £450.  Of  this,  which  has  usu- 
ally been  regarded  as  a  moral  rather  than  a  physical  weight,  a  curious 

*  In  this  year  Mr.  Pitt  made  his  maiden  speech  in  support  of  reform.  The  Eng- 
lish nation  became  clamorous  for  peace  with  Holland,  and  the  national  debt  was  in- 
creasing rapidly,  in  view  of  the  war  with  America.  In  1775  the  debt  was  an- 
nounced as  £122,963,000  ;  whereas,  in  1783,  it  was  reported  at  £238,231,000. 


106  History  of  the  Bank  of  Enr/land. 

estimate  was  made  in  1788.  The  debt  was  calculated  at  242  millions, 
and  divided  into  £lO  notes;  512  of  which  weighing  one  pound,  the 
whole  debt  amounted  to  47,265  lbs. 

During  a  great  part  of  1782,  and  part  of  1784,  the  cash  and  bullion  in 
the  bank  were  very  low.  The  drain  proceeded  from  the  great  extension 
of  commerce  which  followed  the  peace  ;  and  so  large  was  the  export  of 
merchandise  that  the  circulation  could  scarcely  support  it.  But  it  was 
evident  to  the  directors  that  the  return  of  the  amount  of  the  exports 
would  amply  compensate  for  the  preceding  diminution.  Without,  there- 
fore, consulting  the  ministry,  they  took  the  bold  step  of  refusing  to  make 
advances  on  the  loan  of  1783.  Their  judgment  proved  just.  By  an 
alteration  in  the  exchanges  their  anxiety  was  relieved,  and  the  soundness- 
of  the  circulation  restored. 

There  are  many  trifles  which  an  anxious  search  into  contemporaneous 
documents  has  brought  before  the  writer.  A  few  of  these  will  be  given, 
before  proceeding  to  the  most  important  periods  of  the  history  of  the 
bank.  Some  are  curious  in  themselves ;  others  possess  an  interest  from 
their  allusion  to  the  times;  and  all  are  more  or  less  in  connection  with  an 
account  of  the  bank.  Thus  we  read  in  a  magazine  of  1796,  it  was  calcu- 
lated that  the  averacje  balances  of  the  bankinir  houses,  including  the  Bank 
of  England,  amounted  to  £100,000  each;  and  that  the  interest  of 
£11,665,440  on  the  national  debt,  was  one  shilling  in  the  pound  on 
£233,308,800,  the  annual  income  of  the  country.*  The  following  is  a 
curious  instance  of  the  **  vile  use"  to  which  bank  notes  may  occasionally 
be  placed,  from  ignorance  of  their  value.  A  gentleman  who  had  missed 
bis  path  in  llertford,  rode  up  to  a  cottage  for  directions.  Here,  with  an 
old  ballad  stuck  against  a  broken  window-pane,  was  a  bank  note  for  £20. 
The  aged  couple  to  whom  it  belonged  could  neither  read  nor  write,  and 
were  overjoyed  at  the  money  of  which  they  had  been  in  ignorant  posses- 
sion. 

The  fascinations  of  fraud  must  be  great.  Half  the  ingenuity  which  is 
experienced  in  deception,  or  half  the  talent  which  persons  of  damaged 
reputation  employ  to  gain  a  living  dishonestly,  could  not  fail  to  win 
wealth,  repute  and  the  world's  applause. 

In  1780,  a  gentleman  of  eminence  in  the  mercantile  world  was  grieved 
by  the  contents  of  a  letter  which  he  received  from  a  correspondent  at 
Hamburgh,  the  post-mark  of  which  it  bore.  From  the  statement  it  con- 
tained, it  appeared  that  a  person  most  minutely  described  had  defrauded 
the  writer,  under  extraordinary  circumstances,  of  £3,000.  The  letter 
continued  to  say,  information  had  been  obtained  that  the  defrauder — the 
dress  and  person  of  whom  it  described — was  occasionally  to  be  seen  on 
the  Dutch  Walk  of  the  Royal  Exchange.  The  object  of  the  writer  was 
to  induce  his  correspondent  to  invite  the  party  to  dinner;  and,  by  any 
moral  force  which  could  be  used,  compel  him  to  return  the  money  ;  add- 
ing that,  if  he  should  be  found  amenable  to  reason,  and  evince  any  signs 
of  repentance,  he  might  be  dismissed  with  a  friendly  caution  and  fiye 
hundred  pounds,  as  he  was  a  near  relation  of  the  writer.     As  the  gentle- 

*  Mr.  W.  Ray  Smee,  in  his  pamphlet  on  the  income  tax,  in  1846,  after  some  elab- 
orate calculations,  estimates  the  present  income  of  Great  Britain  at  488  millions. 


Origin  of  Country  Banks.  107 

man  whose  name  it  bore  was  a  profitable  correspondent,  the  London 
merchant  kept  a  keen  watch  on  the  Dutch  Walk,  and  was  at  last  success- 
ful in  meeting  and  being  introduced  to  the  cheat.  The  invitation  to  dine 
was  accepted  ;  and  the  host,  having  previously  given  notice  to  his  family 
to  quit  the  table  soon  after  dinner,  acquainted  his  visitor  with  his  know- 
ledge of  the  fraud.  Alarm  and  horror  were  depicted  in  the  countenance 
of  the  young  man,  who,  with  tones  apparently  tremulous  from  emotion, 
begged  his  disgrace  might  not  be  made  public.  To  this  the  merchant 
consented,  provided  the  £3,000  were  returned.  The  visitor  sighed  deeply, 
but  said  that  to  return  all  was  impossible,  as  he  had  unfortunately  spent 
part  of  the  amount.  The  remainder,  however,  he  proposed  to  yield  in- 
stantly, and  the  notes  were  handed  to  the  merchant,  who,  after  dilating 
upon  the  goodness  of  the  man  he  had  robbed,  concluded  his  moral  lesson 
by  handing  a  check  for  £500  as  a  proof  of  his  beneficence.  The  following 
morning  the  gentleman  went  to  the  banker  to  deposit  the  money  he  had 
received,  when,  to  his  great  surprise,  he  Avas  told  that  the  notes  were 
counterfeit.  His  next  inquiries  were  concerning  the  check,  but  that  had 
been  cashed  shortly  after  the  opening  of  the  bank.  He  immediately 
sent  an  express  to  his  Hamburgh  correspondent,  who  replied,  that  the 
letter  was  a  forgery,  and  that  no  fraud  had  been  committed  upon  him. 
The  whole  affair  had  been  plotted  by  a  gang,  some  of  whom  were  on 
the  continent,  and  some  in  England. 

From  a  pamphlet,  published  a  quarter  of  a  century  ago,  the  following 
description  of  the  probable  origin  of  country  banking  is  presented. 

Banking  in  the  country,  like  that  in  the  metropolis,  first  originated 
among  the  more  opulent  and  respectable  class  of  traders  and  merchants. 
In  every  town,  and  in  many  villages,  there  existed,  prior  to  what  were 
afterwards  termed  banks,  some  trader,  manufacturer,  or  shopkeeper,  who 
acted,  in  many  respects,  as  a  banker  to  the  neighborhood.  The  shop- 
keeper, for  example,  being  in  the  habit  of  drawing  bills  on  London,  and 
of  remitting  bills  there,  for  the  purpose  of  his  own  trade,  and  receiving 
also  much  money  at  his  shop,  would  occasionally  give  gold  to  his  custom- 
ers, taking  in  return  their  bills  on  the  metropolis,  which  were  mixed 
with  his  other  bills,  and  sent  to  his  London  correspondent.  Persona 
who  were  not  customers,  being  also  found  to  want  money  for  bills,  or 
bills  for  money,  the  shopkeeper  was  led  to  charge  something  for  his 
trouble  in  accommodating  them;  and  the  trade  of  taking  and  drawing 
bills  being  thus  rendered  profitable,  it  became  an  object  to  increase  it. 
For  the  sake  of  drawing  customers  to  his  house,  the  shopkeeper,  having 
yet,  possibly,  little  or  no  view  to  the  issuing  of  bank  notes,  printed  "  the 
bank,"  over  his  door,  and  engraved  these  words  on  the  checks,  on  which 
he  drew  his  bills. 

It  may  be  assumed  also  to  have  been  common,  before  country  banks 
were  established,  for  the  principal  trader  in  a  town  to  take  at  interest 
some  of  the  money  of  his  neighbors,  on  condition,  however,  that  he  should 
not  be  required  to  give  it  back  without  notice.  The  money  thus  depos- 
ited, or  borrowed  by  him,  might  either  be  thrown  into  his  trade,  or  em- 
ployed in  discounting  bills  soon  to  become  due  ;  but  the  latter  would 
evidently  be  the  most  safe  and  prudent  way  of  investing  it. 

The  transition  from  this  capacity  to  that  of  the  modern  country  banker 


108  History  of  the  Bank  of  England. 

is  so  obvious,  that  it  is  not  necessary  to  trace  it  througli  the  several 
grades  by  which  it  was  made.  It  was  some  time,  however,  before  the 
practice  of  issuing  notes  payable  to  bearer  on  demand,  was  adopted,  and 
which  only  became  general  in  the  interval  between  the  French  and 
American  war.  The  country  was  then  in  a  state  of  great  prosperity,  confi- 
dence was  high,  commerce  and  trade  had  gradually  extended,  the  income 
and  expenditure  of  individuals  had  augmented,  and  every  branch  of  the 
banking  business  naturally  enlarged  itself.  An  increase  had  been  made 
in  the  number  of  London  bankers ;  and  some  of  them  took  active  meas- 
ures to  encourage  the  formation  of  small  banks  in  the  country,  with 
a  view  to  the  benefit  expected  from  a  connection  with  them. 

These  new  establishments  having  taken  place,  various  country  traders, 
who  had  before  made  use  of  their  own  correspondents  in  London,  fell 
into  the  practice  of  transacting  their  business  with  the  metropolis,  through 
the  medium  of  their  country  bankers,  with  whom  they  kept  their  cash. 
The  country  banker  drew  largely  on  a  London  banker  on  the  account  of 
the  country  trader,  and  the  London  banker  was  willing  to  execute  the 
extensive  country  business  which  he  thus  acquired,  in  consideration  of  a 
much  lower  commission  than  had  before  been  paid  by  the  several  country 
traders  to  their  separate  correspondents  in  London,  who  had  been,  for 
the  most  part,  London  merchants. 

Such  are  the  most  material  facts  in  the  origin  and  progress  of  the  pro- 
vincial banks,  and  the  general  substitution  of  a  paper  for  a  metallic  cur- 
rency. They  naturally  grew  out  of  the  circumstances  of  the  country,  and 
are  an  effect  of  the  division  of  labor,  which  takes  place  in  every  opulent 
community. 

In  1789  an  ingenious  fraud  was  perpetrated  by  Francis  Fonton,  a 
clerk  in  the  establishment,  one  of  those  men  whose  real  sin  is  covered  by 
an  appearance  of  sanctity.  Having  been  requested  by  a  friend  to  pur- 
chase £50  stock,  Fonton  gave  him  a  forged  receipt,  and  induced  him,  in 
addition,  to  sign  a  transfer  for  £450,  under  the  idea  that  it  was  an  ac- 
ceptance of  the  £50.  He  remarked  to  a  friend,  shortly  after  his  con- 
viction, that  "  he  had  taken  care  of  his  soul,  and  did  not  mind  what 
they  did  with  his  body ;"  which  was  dealt  with  according  to  law." 

On  the  15th  December,  1790,*  Mr.  Pitt  made  his  first  attempt  upon 

*  The  original  sinking  fund  of  1786,  consisting  of  an  annual  grant  of  £1,000,000 
from  the  consolidated  fund,  increased,  in  1*792,  to  £1,200,000,  together  with  the  in- 
terest of  the  debt  redeemed,  and  annuities  for  lives  or  years  which  might  expire, 
but  limited  not  to  exceed  £4,000,000,  was  appropriated  for  the  redemption  of  the 
debt  then  existing,  of  £238,231,248;  and,  therefore,  when  a  sum  of  redeemed  debt 
to  that  amoimt  should  be  vested  in  the  hands  of  the  commissioners,  that  debt  was 
to  be  considered  as  discharged. 

In  1792,  when  the  war  with  France  commenced,  and  new  loans  became  neces- 
sary, a  sinking  fund  of  one  per  cent,  was  created  on  the  nominal  sum  of  each  loan, 
which,  it  was  estimated,  would  redeesi  it  within  forty-five  years,  at  farthest,  from 
its  contraction.  In  the  succeeding  years,  this  system  was  so  far  deviated  from, 
that  Joans,  to  the  amount  of  £86,796,375  were  contracted,  without  any  sinking  fund 
being  provided  for  their  discharge. 

Had  the  original  system  of  1786  and  1792  been  adhered  to,  so  soon  as  the  debt 
of  1786  was  redeemed,  the  nation  would  have  been  eased  of  taxes  to  the  amount 
of  the  interest  of  that  debt,  and  of  the  sum  appropriated  to  the  first  sinking  fund  ; 
or  these  sums,  or  any  part  of  them,  might  have  been  reserved  for  the  charge  of 
such  loans,  as  the  exigencies  of  the  times  should  require. 


Unclaimed  Dividends.  109 

the  dividends  of  those  fnndholders  who  had  allowed  them  to  remain  nn- 
claimed.  In  1V27,  the  bajance  of  this  fund  was  £43,000;  in  1752, 
£60,000  ;  in  1Y74,  £292,000  ;  in  1776,  £314,000  ;  and  in  1789,  £547,000, 
In  consequence  of  these  accumulations,  Mr.  Pitt  proposed  to  take  all,  ex- 
cepting a  floating  balance  of  £50,000,  to  be  left  in  the  hands  of  the  bank. 
It  caused  indignation,  not  usual  in  collective  bodies,  to  spread  through 
the  bank  stock  proprietary  ;  courts  were  held,  at  which  the  proposijtion 
was  denounced ;  counsels,  opinions  stated,  speeches  uttered,  which 
blended  national  insecurity  with  the  seizure  of  the  unclaimed  dividends, 
and  the  destruction  of  public  faith  with  the  invasion  of  the  corporation 
coffers ;  and  all  with  that  earnest  eloquence  which  is,  born  of  invaded 
rights  or  diminished  purses.  But  the  measure  was  introduced  into  Par- 
liament, and  the  opposition  became  more  energetic.  The  fine  mind  of 
Burke  was  employed  in  ridiculing  the  proposal,  and  the  great  Whig 
leader  argued  strenuously  against  its  injustice.  Meetings  of  the  pro- 
prietors were  again  held,  and  the  conduct  of  Mr.  Pitt  reprobated  in  no 
measured  terms.  It  was  called  "  so  miserable  a  financial  operation,  that 
the  world  would  think  w^e  were  at  the  end  of  our  resources."  A  pro- 
posal was  made  by  the  governor  to  lend  £500,000,  without  interest, 
until  the  unclaimed  dividends  should  be  less  than  £600,000,  on  condition 
of  an  abandonment  of  the  claim.  The  prescient  mind  of  Mr.  Pitt,. 
which  saw  the  improbability  of  their  decrease,  induced  him  to  accept 
the  proposal,  and  thus  ended  the  first  attempt  upon  the  unclaimed  divi- 
dends. It  is  probable  that  the  bank  proprietors  regarded  them  as  the 
property  of  the  corporation,  and  this  may  account  for  the  lively  interest 
excited  at  the  prospect  of  their  removal.  The  question  appears  a  very 
simple  one.  In  the  absence  of  a  claimant,  they  belonged  either  to  the 
bank  or  to  the  State.  If  to  the  bank,  it  must  have  been  by  special 
agreement.  As  mere  paymasters  of  the  government,  they  could  not  pos- 
sess the  slightest  claim.  It  was  an  accumulated  fund,  which  belonged  to 
the  government  in  the  absence  of  the  owner.  It  is,  however,  impossible 
to  read  the  objections  raised  against  the  government,  for  demanding  their 
own  property,  without  wondering  at  the  party-spirit  which  could  warp 
the  clear  views  of  statesmen  like  Mr.  Fox  and  Mr.  Burke,  and  induce 
them  to  oppose  a  claim,  the  justice  of  which  was  indisputable.  In  1791, 
in  consequence  of  this  question  being  mooted,  a  list  of  those  persons  en- 
titled to  unclaimed  dividends  was  first  published.  It  has  proved  in  many 
cases  a  benefit  of  the  utmost  importance,  and  should  be  circulated  to  the 
greatest  possible  extent,  as  it  is  probable  that,  at  the  present  moment, 
many  creditors  of  government  are  languishing  in  poverty,  from  an  igno- 
rance of  their  just  claims. 

In  1793  an  act  was  passed  protecting  the  governor  and  company  from 
any  penalty  on  account  of  their  having  advanced,  or  advancing  in  future, 
any  sums  of  money  in  payment  of  bills  of  exchange,  not  charged  on 
any  branch  of  the  revenue.  In  the  same  year  the  East  India  annuities 
were  placed  under  the  management  of  the  bank,  and  in  the  following 
year  the  government  of  Ireland  negotiated  a  loan,  with  an  option  to  the 
subscribers  of  receiving  their  dividends  and  transferring  their  stock  in 
London.  The  management  of  such  dividends  and  transfers  was  under- 
taken by  the  directors  of  the  bank,  and  the  agreement  received  the  sanc- 
8 


110  History  of  the  Bank  of  England. 

tion  of  Parliament.     In  1795  the  corporation  commenced  an  issue  of 
£5  notes. 

During  the  year  1793,  one  of  those  seasons  of  distress,  which  occur 
from  time  to  time,  shed  a  gloom  throughout  England.  A  period  of 
peace  had  produced  great  apparent  prosperity.  From  the  American  war 
to  the  French  revolution,  England  had  enjoyed  a  state  of  profound  re- 
pose* The  eminently  commercial  minds  of  the  people  had  employed 
this  period  in  extending  the  trade,  and  in  seeking  fresh  employment  for 
the  accumulating  capital.  Building,  machinery  and  inland  navigation 
employed  part  of  it,  and  the  augmented  business  of  the  country  de- 
manded new  banks,  which,  by  the  additional  facilities  they  gave  to  com- 
merce, tended  greatly  to  improve  it.  For  eight  or  nine  years  it  had 
progressively  increased;  but  at  the  end  of  1792  wide  commercial  misery 
spread  throughout  England.  "  On  Tuesday  evening,  the  19th  February, 
1793,"  says  Chalmers,  "the  Bank  of  England  threw  out  the  paper  of 
Lane,  Son  &  Fkaser,  and  next  morning  they  stopped  payment  to  the 
amount  of  almost  a  million  of  money.  This  great  failure  involved  tho 
fate  of  several  very  substantial  traders." 

Merchants,  witii  ample  but  unavailable  funds,  were  compelled  to  bend 
before  the  storm.  Bankers  of  unquestionable  solidity  ceased  payment 
under  the  influence  of  the  panic.  Every  man  was  suspicious  of  his 
neighbor.  The  value  of  property  seemed  annihilated  in  the  doubt  and 
dread  of  the  people.  Gloomy  apprehensions  seized  on  all ;  and  those 
who  had  money  preferred  rather  to  hoard  than  to  risk  it.  The  country 
banks  were  the  greatest  sufferers;  and  the  ruin  they  experienced  spread 
like  a  plague  among  the  interests  which  had  trusted  them.  They  had 
pushed  their  notes  eagerly  into  circulation,  and  were  the  chief  cause  of 
the  great  drain  of  cash  from  the  Bank  of  England,  which  exceeded  any 
demand  of  the  kind  for  more  than  ten  years.  Upwards  of  one  hundred 
country  banks  failed.  Mr.  Tooke  considers  the  distress  of  this  period  to 
have  been  exaggerated  ;  but  the  failure  of  so  many  banks  must  have  in- 
volved an  incalculable  amount  of  misery. 

Chalmers  believes  the  whole  mischief  to  have  arisen  from  the  in- 
creased number  and  reckless  operations  of  the  country  banks,  one  of 
which  was  in  nearly  every  market  town.  Of  these  establishments,  204 
out  of  279  issued  what  were  termed  optional  notes,  payable  either  in  the 
metropolis  or  in  the  country.  "They  came  oftener,"  he  says,  "and  in 
greater  numbers,  to  London,  than  were  welcome  in  the  shops  of  London. 
These  notes  became  discredited,  not  only  in  proportion  as  the  supply  was 
greater  than  the  demand,  but  as  the  banks  were  distant  and  unknown. 
The  projects  and  arts  by  which  those  notes  were  pushed  into  the  circle 
of  trade,  were  regarded  with  a  very  evil  eye  by  those  who,  in  this  man- 
ao-ement,  saw  great  imprudence  in  many,  and  a  little  fraudulence  in 
some.  When  suspicion  stalked  out  to  create  alarm,  and  alarm  ran  about 
to  create  panic,  more  than  300  country  banks  in  England  sustained  a 
fiiiock." 

The  alarm  grew  so  universal,  that  government  were  compelled  to  take 
notice  of  the  applications  made  for  assistance.  The  restoration  of  confi- 
dence was  an  important  point :  Mr.  Pitt,  therefore,  called  a  meeting  at 
his  private  residence,  to  consider  the  propriety  of  a  parliamentary  advance 


Exchequer  Bills  Advanced.  Ill 

of  exchequer  bills,  on  sufficient  security,  to  those  persons  by  whom  the 
pressure  of  .the  times  was  felt.*  Various  opinions  were  broached;  and, 
after  a  lengthened  discussion,  it  was  resolved  that  a  meeting  should  be 
held  at  the  Mansion-house,  to  consider  the  plan  proposed  by  the  minis- 
ter. Here  another  discussion  ensued,  which  ended  in  the  unanimous 
adoption  of  a  resolution,  "that  the  interposition  of  Parliament  was  neces- 
sary, and  that  an  issue  of  exchequer  bills  was  the  best  practical  remedy." 
The  position  of  trade  at  this  juncture  was  unquestionably  critical.  The 
discredit  of  the  country  paper  had  produced  a  deficiency  of  the  circulating 
medium,  and  mercantile  transactions  were  greatly  impeded  by  it.  The 
bankers,  anxious  to  retain  their  own  credit  immaculate,  kept  larger  suras 
in  their  possession  than  was  necessary,  so  that  a  considerable  part  of  the 
circulation  was  withdrawn ;  and  those  merchants  who  required  discounts 
on  long-dated  bills  found  a  difficulty  in  procuring  them.  Houses,  with 
sufficient  securities  to  meet  all  their  creditors,  and,  probably,  leave  an 
overplus  of  hundreds  of  thousands,  were  compelled  to  suspend  payment. 
Manufacturers  could  neither  dispose  of  their  goods  nor  raise  money  on 
them.  The  two  great  chartered  banks  of  Scotland  felt  the  difficulty. 
Those  of  Glasgow,  Paisley  and  Greenock  had  ceased  to  discount  to  any 
extent,  as  their  notes  were  returned  for  gold,  and  their  power  crippled. 
On  these,  and  similar  grounds,  a  committee  recommended  that  five  mil- 
lions should  be  advanced  in  exchequer  bills,  on  security  approved  of  by 
the  commissioners,  or  on  the  deposit  of  goods  of  double  the  value  of  the 
sums  advanced.  The  effect  of  this  measure  was  immediate  and  universal. 
The  capitalists,  who  had  held  back  when  help  was  required,  came  forward 
directly  government  proffered  its  assistance.  "  The  very  first  intimation 
of  the  intention  of  the  legislature,"  says  Macpherson,  "  to  support  the 
merchants,  operated  all  over  the  country  like  a  charm,  and  in  a  great  de- 
gree superseded  the  necessity  of  the  relief,  by  an  almost  instantaneous 
restoration  of  mercantile  confidence."  Out  of  the  five  millions  voted,  only 
£2,202,200  were  advanced,  which  was  all  ultimately  repaid  ;  and,  though 
two  hundred  and  thirty-eight  persons  were  assisted,  only  two  became 
bankrupt.  By  the  end  of  the  year,  confidence  was  restored,  and  the  fa- 
cilities for  raising  money  were  as  usual.  A  drain  upon  the  gold  of  the 
bank,  arising  from  these  causes,  commenced  in  June,  1792,  and  lasted  till 
the  following  March.      The  bank  increased  their  discounts ;  and  the 

*  The  present  sinking  fund  was  established  under  Mr.  Pitt's  administration,  in 
1*786.  The  various  branches  of  revenue  then  existing  were  united  under  the  name 
of  the  consolidated  fund.  One  million,  taken  from  that  fund,  was  vested  annually 
in  the  hands  of  commissioners  for  the  redemption  of  the  national  debt,  to  be  applied 
for  purchasing  capital  in  such  stocks  as  they  should  judge  expedient,  at  the  market 
prices. 

To  this  fund  was  to  be  added  the  interest  of  the  debt  redeemed,  and  annuities 
fallen  in  by  the  failure  of  lives,  or  the  close  of  the  terms  for  which  they  were 
granted,  and  life  annuities  fallen  in  by  the  failure  of  lives,  or  the  close  of  the  terma 
for  which  they  were  granted ;  and  life  annuities  unclaimed  for  three  years  were  con- 
sidered as  expired,  and  added  to  the  sinking  fund.  When  this  fund  amounted  to 
£4,000,000,  it  was  enacted  that  the  interest  of  the  redeemed  debt,  and  annuities 
fallen  in,  were  no  longer  to  be  applied  to  it,  but  remain  at  the  disposal  of  Parlia- 
ment. 


112  History  of  the  Bank  of  England. 

amount  of  cash  and  bullion  gradually  arose  until  it  reached  the  amount 
from  which  it  had  commenced  declining. 

A  writer  of  the  present  century,  now  no  more,  but  one  whose  losses  in 
American  securities  were  a  great  gain  to  literature,  wrote  with  his  une- 
qualled pen,  "  The  warlike  power  of  every  country  depends  on  their  three 
per  cents.  If  C^sar  were  to  reappear  on  earth,  AVettenhall's  list 
would  be  more  important  than  his  '  Commentaries  ;'  Rothschild  would 
open  and  shut  the  Temple  of  Janus;  Thomas  Baring,  or  Bates,  would 
probably  command  the  tenth  legion ;  and  the  soldiers  would  march  to 
battle  with  loud  cries  of  scrip  and  omnium,  reduced,  consols,  and  C^sar." 
The  following  fact  is  some  testimony  of  the  truth  of  these  remarks  of  the 
witty  canon  of  St.  Paul's.  In  179G,  the  wealth  of  England  was  demon- 
strated in  an  extraordinary  degree.  The  correspondence  of  Lord  Malmes- 
bury  has  proved  that  Mr.  Pitt  was  always  willing  to  enter  into  a  negoti- 
ation for  peace.  The  French  directory,  however,  fancying  that  the  riches 
of  England  were  evaporating,  were  reluctant  to  come  to  terms.  The  be- 
lief spread  throughout  the  country  that  this  arose  from  an  opinion  that 
the  resources  of  England  were  nearly  exhausted,  and  Mr.  Pitt  determined 
to  avail  himself  of  the  feeling,  by  demanding  a  loan  of  £18,000,000. 
The  following  were  the  terras  proposed  :  "  Every  person  subscribing  £100 
to  receive  £1I2  in  five  per  cent,  stock,  to  be  unredeemable,  unless  with 
the  consent  of  the  owner,  until  the  expiration  of  three  years  after  the 
present  five  per  cents  shall  have  been  redeemed,  but,  with  the  option  of 
the  holder,  to  be  paid  at  par,  at  any  shorter  period,  not  less  than  two 
years  from  the  conclusion  of  the  definitive  treaty  of  peace."  On  the  first 
day  of  December  the  subscription  opened.  The  bank  subscribed  one 
million,  and  each  of  the  directors  £400,000.  The  first  day  saw  five  mil- 
lions subscribed,  and  in  the  second  the  subscription  reached  nearly 
twelve  millions.  The  anxiety  continued  on  the  third;  and  on  the  follow- 
ing Monday,  the  names  received  from  the  country  were  added  before  the 
opening  of  the  doors,  when,  so  great  was  the  crowd,  that  numbers  could 
not  get  near  the  books,  but  called  out  to  their  more  fortunate  brethren 
to  enter  their  names.  In  an  hour  and  twenty  minutes  the  subscription 
was  filled.  "  So  great  and  so  general,"  says  Mr.  Weir,  "  was  the  desire* 
to  subscribe,  that  the  room  was  a  scene  of  the  utmost  confusion.  Persons 
continued  to  come  long  afterwards ;  and  a  vast  number  of  orders  were 
sent  by  post,  which  were  too  late  to  be  executed.  It  is  a  curious  fact 
that  the  subscription  for  this  enormous  sum  was  completed  in  fifteen  hours 
and  twenty  minutes.  The  loan,  from  the  stimulus  of  national  excitement 
under  which  it  was  raised,  was  called  "  the  Loyalty  Loan." 

*  The  three  per  cents,  from  5Y,  at  the  close  of  the  war  with  America,  had  risen 
to  99 ;  and  the  overflowing  wealth  id  the  capital  was  already  finding  its  way  into 
the  most  circuitous  foreign  trades  and  hazardous  distant  investments.  The  national 
revenue  amounted  to  £16,000,000,  and  the  army  included  32,000  soldiers  in  the 
British  Isles,  besides  an  equal  force  in  the  East  and  West  Indies,  and  thirty-six 
regiments  of  yeomanry.  But  these  forces  were  rapidly  augmented  after  the  com- 
mencement of  the  war;  and  before  1796  the  regular  army  of  Britain  amounted  to 
two  hundred  and  six  thousand  men,  including  forty-two  thousand  militia. — ^Alison's 
Europe,  vol.  1,  p.  158. 


Historical  Sketch  of  the  Cessation  of  Cash  Payments.  113 


CHAPTER    XII. 

HISTORICAL   SKETCH   OF   THE    CESSATION    OF    CASH   PAYMENTS APPLICATION    OF  MR.  PITT 

ASSISTANCE     RENDERED     BY     THE     COURT    OF     DIRECTORS DIMINUTION   OF   DISCOUNTS 

POLITICAL   POSITION    OF   THE   COUNTRY DRAIN    OF    BULLION. 

A  HISTORY  of  the  cessation  of  cash  payments,  in  1797,  would  be  in- 
complete, without  a  sketch  of  the  political  events  which  tended  to  pro- 
duce it.  Thirty  years  of  peace,  thirty  years  of  social,  moral  and  physical 
progress,  have  enabled  the  present  generation  to  judge  calmly  of  the 
events  of  half  a  century  ago. 

Up  to  the  year  1789,  the  spirit  of  the  times  was  monarchical.  The 
existing  European  dynasties  possessed  great,  and,  in  many  instances, 
irresponsible  power.  That  power  was  wielded  harshly.  The  great  les- 
son had  yet  to  be  learned,  that  the  real  strength  of  a  king  is  the  love  of 
his  people.  In  that  year,  the  upheavings  of  the  moral  earthquake,  which 
was  to  create  a  change  in  all  the  institutions  of  Europe,  were  felt  in  Paris. 
At  first,  a  generous  love  of  liberty  pervaded  the  nation  ;  and  the  inhabi- 
tants of  England  sympathized  with  their  neighbors.  But  anarchy  suc- 
ceeded to  revolution  ;  the  capital  wa%  convulsed  ;  the  reign  of  terror  fol- 
lowed ;  and  they  who  had  been  loudest  in  their  applause  were  the  most 
rapid  in  their  recantation.  "Even  in  its  first  hours  it  showed  a  thirst  for 
slaughter,"  says  Dr.  Croly,  "which  stamped  its  nature.  The  acclama- 
tions of  Europe,  which,  struck  with  its  sudden  vigor,  its  lofty  protesta- 
tions, and  the  bold  rapidity  of  its  strides  over  the  wrecks  of  feudalism, 
had  followed  its  early  progress,  soon  died  away ;  men  could  not  wade 
after  it  so  deep  in  gore.  Still  it  rushed  on,  flinging  aside  at  every  step 
some  portion  of  that  Jesuitical  mask  which  it  first  wore  ;  hourly  rending 
away,  with  a  more  contemptuous  hand,  some  fragment  of  those  ties  which 
allied  it  to  the  common  families  of  nations ;  until  at  length  it  scaled  the 
steps  of  the  throne,  tore  down  its  unfortunate  possessor,  and,  with  the 
guillotine  for  its  footstool,  and  the  populace  for  its  ministers,  seated  itself 
in  full  supremacy  of  ruin." 

England,  with  the  English  nation,  felt  the  shock ;  a  desire  for  political 
change  spread  throughout  the  country.  But  the  people  witnessed  the 
thirst  for  blood  which  seized  their  neighbors,  and  the  sound  English 
heart  recoiled  from  the  horrors  of  the  guillotine,  from  the  barbarities  of 
the  convention  and  from  the  reign  of  terror.  The  powers  of  the  conti- 
nent were  stricken  with  alarm,  and  united  to  quench  the  democratic  fury 
of  the  republic.  But  the  energy  of  the  French  citizens  pervaded  the 
soldiery,  and  they  sent  the  invaders  in  confusion  from  the  soil  of  France. 
From  this  period  a  fierce  and  expensive  war  shook  Europe  to  her  centre; 
and  England  bore  the  burthen.  In  six  months,  William  Pitt  concluded 
seven  treaties  and  six  subsidies  ;  and  France  saw  her  territories  invaded 
by  three  hundred  and  fifty  thousand  of  the  most  warlike  troops  in  Europe. 
But  the  pressure  fell  fearfully  upon  the  people  of  Great  Britain.  The 
national  debt  was  doubled ;  the  national  taxes  were  increased  ;  the  na- 


114  History  of  the  Banh  of  England. 

tional  industry  -was  checked  ;  and,  more  dangerous  than  all,  national 
credit  was  difficult  to  maintain.  Gold  grew  scarce  throughout  the  coun- 
try ;  bullion  fled  from  the  bank  coffers  ;  and  the  corporation,  urged  by 
William  Pitt,  strained  credit,  means  and  almost  character,  to  support 
the  government,  of  which  he  was  the  leader.  It  was,  indeed,  a  question 
of  national  existence.  A  dishonorable  peace  might  have  been  obtained ; 
but  no  true  Englishman  thought  of  that.  It  was  a  question  also  of  exist- 
ence for  the  bank,  whose  life  was  bound  up  with  that  of  the  State. 

It  is  not  too  much  to  say  that  the  bank  directors  were  the  support  of 
the  country's  credit.  Bills,  for  which  no  forethought  of  the  jninistry 
could  provide,  were  met  by  them.  Sudden  emergencies  of  the  State 
were  never  disregarded  by  them.  The  credit  of  the  treasury  was  main- 
tained ;  the  army  and  the  navy  were  supported  by  them.  They  acted  as 
generous  bankers  to  the  government ;  and  bore  the  displeasure  of  their 
proprietary,  to  whom,  had  they  been  disposed  to  be  selfish,  they  might 
have  pointed,  while  they  exclaimed,  "  We  do  perceive  here  a  divided 
duty.''     They  were  the  nerves  and  sinews  of  the  State. 

This  is  no  overcharged  picture,  drawn  by  a  partial  testimony.  The 
evidence  of  the  bankers,  and  other  great  men  of  the  city,  vouch  for  it. 
The  letters  of  William  Pitt  verify  it.  The  censure  of  some  of  the  pro- 
prietary, who  shortsightedly  preferred  a  large  dividend  to  the  salvation 
of  their  country,  proves  it. 

But  the  court  of  directors  were  Hot  passive  tools.  Because  no  remon- 
strances appeared,  it  is  not  to  be  concluded  that  none  were  made.  On  the 
15th  January,  1'795,  two  years  before  the  cessation  of  cash  payments,  they 
came  to  a  resolution  to  inform  the  chancellor  of  the  exchequer,  "  it  was 
their  wish  that  he  would  settle  his  arrangements  for  the  present  year,  so 
as  not  to  depend  on  any  further  assistance  from  them  ;  and  that  the  stipula- 
tion for  the  future  advances  for  payment  of  treasury  bills  of  exchange  be 
strictly  adhered  to,  as  they  could  not  allow  it  to  exceed  £500,000."  On 
16th  April,  the  governor  and  deputy-governor  were  requested  by  the 
court  "  to  wait  on  the  chancellor  of  the  exchequer,  and  express  their  un- 
easiness at  being  in  advance  for  so  long  a  period,  of  from  one  and  a  half 
to  two  millions  on  the  treasury  bills."  It  was  added,  "The  court  cannot 
allow  any  disbursement  exceeding  £500,000  ;  and  they  request  the  chan- 
cellor of  the  exchequer  to  order  the  same  to  be  paid."  On  the  5th  of 
June,  a  note  from  the  governor  and  deputy-governor  informed  Mr.  Pitt, 
that  though  he  had  promised  the  advance  on  the  treasury  bills  should 
not  exceed  £500,000,  yet  they  were  in  advance  on  them  £1,210,015; 
that  by  next  week  it  would  be  £168,467  ;  and  they  hoped  he  would  give 
directions  in  future  to  prevent  it."  On  the  30th  July  it  was  resolved, 
"  That  the  governor  and  deputy-governor  request  the  chancellor  of  the 
exchequer  to  adopt  some  other  mode  of  paying  the  treasury  bills ;  and 
that  the  court  is  determined  to  order  their  cashiers  to  refuse  payment  of 
all  bills  whenever  the  advance  shall  amount  to  £500,000." 

The  only  reply  from  Mr.  Pitt  was  a  request  for  a  further  accommoda- 
tion, on  the  credit  of  the  consolidated  fund,  which  the  court  refused  to 
sanction,  until  they  had  received  satisfaction  on  the  topic  of  the  treasury 
bills,  and  requested  Mr.  Pitt  to  enter  into  a  full  explanation  on  this 
subject,  which  was  not  even  touched  upon  in  his  letter.     This  resolution 


Communications  with  Mr.  Pitt.  115 

being  communicated,  Mr.  Pitt  wrote  to  the  governor  and  deputy-gover- 
nor on  the  12th  August,  that  "they  might  depend  upon  measures  being 
immediately  taken  for  the  payment  of  one  million,  and  a  further  pay- 
ment, to  the  amount  of  one  million,  being  made  in  September,  Oc- 
tober and  November,  in  such  proportions  as  might  be  found  con- 
venient. But,  as  fresh  bills  might  arrive,  he  was  under  the  necessity  of 
requesting  a  latitude  to  an  amount  not  exceeding  one  million."  About 
the  same  period  the  court  "  desired  the  governor  and  deputy-governor 
would  express  their  earnest  desire  that  some  other  means  might  be 
adopted  for  the  future  payment  of  bills  of  exchange  drawn  on  the  trea- 
sury." On  the  8th  of  October  Mr.  Pitt  was  desired  to  reimburse  the 
bank  one  million,  conformably  to  his  agreement,  together  with  two  mil- 
lions and  a  half  lent  him  on  the  consolidated  fund.  On  the  23d  October 
the  governor  mentioned  to  the  chancellor  that  he  had  heard  there  might 
be  annexed  to  a  proposed  loan,  one  of  £1,400,000  to  the  Emperor  of 
Germany.  Mr.  Pitt  replied,  that  he  had  not  at  present  the  most  distant 
idea  of  it.  The  governor  said,  "  he  received  the  answer  with  pleasure, 
thinking,  as  he  did,  that  another  loan  of  that  sort  would  go  nigh  to  ruin 
the  country."  The  governor  also  acquainted  Mr.  Pitt  that  there  was  a 
drain  on  the  cash,  wbich  was  likely  to  continue  while  the  bills  from 
abroad  were  drawn  on  the  treasury. 

There  is  no  servility  in  these  communications.  •  They  are  such  as  any 
honorable  body,  jealous  of  its  own  credit,  and  desirous  of  the  country's 
reputation,  could  not  fail  to  make.  But  their  appeals  grew  more  serious. 
On  the  18th  November  "the  governor  informed  Mr.  Pitt  that  gold  was 
£4  2s.  per  ounce,  that  the  daily  large  drains  of  specie  from  the  bank 
filled  the  minds  of  the  directors  with  serious  apprehensions,  and  that  he 
must  not  rely  on  any  aid  from  them."  In  a  communication  of  20th  No- 
vember, the  governor  repeated  to  Mr.  Pitt  the  "  absolute  determination 
of  the  court  to  have  the  advance  on  the  treasury  bills  quite  cleared  off," 
and  that  it  would  be  utterly  out  of  the  power  of  the  court  to  make  the 
advance  on  the  vote  of  credit.  On  the  28th  January,  1796,  the  gover- 
nor informed  the  court  that  £201,000  treasury  bills  would  fall  due  for 
payment  at  the  bank  on  3d  February,  and  that  the  sum  now  in  advance 
was  £1,157,000.  The  court  came  to  the  bold  resolution,  "That  the 
governor  give  directions  to  the  cashiers  not  to  advance  any  money  for 
the  payment  of  these  bills,  nor  to  discharge  any  part  of  the  same,  unless 
money  shall  be  sent  for  the  same." 

To  this  resolution  the  directors  adhered,  and  for  once  the  chancellor 
of  the  exchequer,  after  dwelling  on  the  great  inconvenience  it  would  cause 
him,  said,  "  he  would  arrange  his  affairs  so  as  to  provide  the  money  in 
time  for  the  payment  of  the  treasury  bills."  Compulsion  like  this  was 
not  very  pleasing  to  the  "  heaven-born  minister ;"  and  on  12th  February, 
1796,  Mr.  Pitt  made  the  following  ominous  remark,  in  reply  to  a  com- 
munication from  the  governor :  "  It  lay  with  the  court  of  directors  to 
judge  whether  they  chose  to  accommodate  the  public  or  not." 

About  the  commencement  of  this  year  it  was  proposed  to  raise  a  loan 
in  Germany,  for  the  emperor,  to  be  assisted  by  a  guarantee  from  the 
English  Parliament.  It  was  soon  discovered,  however,  that  the  loan 
might  as  well  be  procured  in  England,  as  the  guarantee  would  have 


116  History  of  the  Bank  of  England. 

nearly  the  same  effect  as  raising  it  in  tliis  country.  The  directors  were 
alarmed  at  the  prospect  of  the  gold  diminishing,  and  came  to  the  follow- 
ing resolution  :  "  It  is  the  opinion  of  this  court,  that  if  any  further  loan 
or  advance  of  money  to  the  emperor,  or  any  other  foreign  State,  should, 
in  the  present  state  of  affairs,  take  place,  it  will  in  all  probability  prove 
fatal  to  the  Bank  of  England.  The  court  of  directors  do  therefore  most 
earnestly  deprecate  the  adoption  of  any  such  measure,  and  they  solemnly 
protest  against  any  responsibility  for  the  calamitous  consequences  that 
may  follow  thereupon."  On  the  20th  of  July  Mr.  Pitt  wrote  a  letter  to 
the  governor.  The  following  is  an  abstract  of  some  of  the  most  marked 
sentences,  and  demonstrates  the  importance  attached  by  Mr.  Pitt  to  the 
advances  for  which  he  asked  : 

"  I  shall  consider  it  as  a  great  accommodation."  "  I  am  also  under 
the  indispensable  necessity  of  expressing  my  earnest  hope  that  the  court 
will  be  induced  to  make  a  present  advance  of  £800,000  on  the  consoli- 
dated fund."  "  I  shall  also  be  obliged  to  request  a  further  advance  of 
£800,000,  on  the  same  security,  in  August."  The  conclusion  is  remark- 
able :  "  It  gives  me  much  concern  to  be  obliged  to  apply  for  an  accom- 
modation to  so  large  an  extent ;  but  I  cannot  too  strongly  represent  how 
necessary  it  is  for  the  public  service."  One  week  only  after  this  he 
wrote  even  more  ardently,  with  a  request  for  assistance,  stating,  "  He  felt 
it  an  indispensable  duty  to  represent  to  them,  in  the  most  earnest  man- 
ner, that  it  would  be  impossible  to  avoid  the  most  serious  and  distress- 
ing embarrassments  to  the  public  service,"  unless  his  request  could  be 
complied  with.  This  appeal  was  met  by  the  resolution,  that  the  "  court 
do  agree  to  advance,  for  the  service  of  the  public,  the  sum  of  eight  hun- 
dred thousand  pounds,  on  the  security  of  the  exchequer  bills." 

But  the  almost  solemn  tone  of  the  letter  from  Mr.  Pitt  alarmed  the 
directors,  and  they  resolved  "that  this  court  do  expect  that  the  chancel- 
lor of  the  exchequer  will  give  a  promise  that  a  new  mode  of  paying  the 
treasury  bills  shall  be  adopted  immediately  on  the  meeting  of  Parliament, 
as  this  court  will  not  continue  discharging  them  any  longer."  It  was 
also  accompanied  by  the  following  memorial :  "  The  court  of  directors  of 
the  Bank  of  England,  fully  sensible  of  the  alarming  and  dangerous  situa- 
tion of  the  public  credit  of  this  kingdom,  and  deeply  impressed  by  the 
communication  made  to  them  by  the  Right  Honorable  William  Pitt, 
are  very  willing  and  desirous  to  do  every  thing  in  their  power  to  support 
the  national  credit ;  but  in  complying  with  the  request  made  them  by 
the  Right  Honorable  William  Pitt,  they  think  they  should  be  wanting 
in  their  duty  to  the  proprietors  and  to  the  public,  if  that  compliance 
was  not  accompanied  with  the  following  most  serious  and  solemn  remon- 
strance, which,  for  the  justification  of  their  court,  they  desire  may  be 
laid  before  his  majesty's  cabinet. 

"  They  beg  leave  to  declare,  that  nothing  could  induce  them,  under 
the  present  circumstances,  to  comply  with  the  demand  now  made  upon 
them,  but  from  the  dread  that  their  refusal  might  be  productive  of  a 
greater  evil ;  and  nothing  but  the  extreme  pressure  and  exigency  of  the 
case  can  in  any^shapc  justify  them  for  acceding  to  the  measure ;  and 
they  apprehend  that,  in  so  doing,  they  render  themselves  totally  incapa- 
ble of  granting  any  further  assistance  to  government  during  the  remain- 


Advances  to  Government — Drain  of  Bullion.  117 

der  of  this  year ;  and  unable  even  to  make  the  usual  advances  on  the 
land  and  malt  for  the  ensuing  year,  should  those  bills  be  passed  before 
Christmas.  They  likewise  consent  to  this  measure,  in  a  firm  reliance 
that  the  repeated  promises,  so  frequently  made  to  them,  that  the  ad- 
vances on  the  treasury  bills  should  be  completely  done  away,  may  be  ac- 
tually fulfilled  at  the  next  meeting  of  Parliament,  and  the  necessary 
arrangements  taken  to  prevent  the  same  from  ever  happening  again,  as 
they  conceive  it  to  be  an  unconstitutional  mode  of  raising  money,  what 
they  are  not  warranted  by  their  charter  to  consent  to,  and  an  advance 
always  extremely  inconvenient  to  themselves." 

This  important  declaration  should  be  remembered.  It  marks  strong 
good-will  on  the  part  of  the  directors  towards  the  country,  which  govern- 
ment should  always  have  borne  in  mind.  On  31st  January,  1797,  the 
governor  and  deputy-governor  waited  on  the  chancellor  of  the  exchequer, 
to  represent  to  him  how  uneasy  the  court  were  at  their  large  advances, 
and  to  require  that  some  effective  measures  should  be  immediately  taken 
for  the  payment.  On  the  10th  February,  the  committee,  startled  at  the 
prospect  of  a  loan  of  one  million  and  a  half  for  Ireland,  a  great  part  of 
which  would  be  made  in  specie,  resolved  to  ask  a  reduction  of  the  follow- 
ing advances  to  government : 

Arrears  of  advance  on  land  and  malt,  1'794, £  SST.OOO 

"             "             "               "            1795, 491,000 

"              "              "                "             1796, 2,392,000 

Exchequer  bills  on  vote  of  credit, 968,000 

on  consolidated  fund,  1796, 1,323,000 

Treasury  bills  paid, 1,674,645 

£7,185,645 
Arrears  of  interest, 400,000 

£7,585,645 

This  statement  was  immediately  placed  before  Mr.  Pitt,  accompanied 
with  a  desire  that  the  sums  specified  might  be  repaid,  or  arranged  before 
the  settlement  of  the  Irish  loan,  which  was  then  contemplated.  On  the 
18th  of  the  same  month,  the  governor  was  requested  by  the  directors  to 
assure  Mr.  Pitt  that  this  loan  •"  would  most  probably  bring  them  under 
the  necessity  of  shutting  up  their  doors."  On  the  21st,  a  minute  of  the 
meeting  of  the  court  expressed  the  conviction  impressed  upon  them  "  by 
the  constant  calls  of  bankers  from  all  parts  of  the  town,  for  cash,  that 
there  must  be  some  extraordinary  reasons  for  this  drain." 

It  is  impossible  to  read  these  communications,  and  not  remark  the 
assistance  afforded  to  the  State,  through  a  series  of  years.  That  Mr. 
Pitt  was  fully  sensible  of  it,  is  proved  by  the  proposition  he  made  to  the 
House,  to  give  bank  notes  the  guarantee  of  the  national  security.  As  it 
was  a  crisis  in  the  history  of  the  corporation,  caused  solely  by  the  ad- 
vances made  to  government,  so  it  could  only  be  removed  or  remedied  by 
the  chancellor  of  the  exchequer,  in  his  public  character.  It  is  due  to 
this  gentleman  to  say,  that  he  did  not  shrin-k  from  the  responsibility,  but 
met  the  galling  fire,  with  which  his  opponents  assailed  him,  with  great 
gallantry.     The  fine  rhetoric  of  Mr.  Fox,  the  wit  and  the  eloquence  of  Mr. 


118  History  of  the  Bank  of  England. 

Sheridan,  were  all  borne  with  an  equanimity  that  resulted  equally  from 
the  possession  of  a  great  mind  and  a  great  majority. 

While  these  proceedings  were  pending,  other  causes  were  also  in 
active  operation.  The  drain  of  bullion  continued.  From  month  to 
month  the  bank  found  its  stock  decreasing.  From  month  to  month  the 
directors  were  alarmed  by  the  foreshadow  of  that  which  afterwards  over- 
took them.  Whether  the  plan  they  adopted  to  avert  the  difficulty  was  ad- 
visable, is  an  open  question.  In  1795  they  began  to  limit  their  discounts. 
On  the  last  day  of  that  year  the  court  of  directors  came  to  the  following 
resolution,  which  was  ordered  to  be  placed  in  the  discount  office  : 

'■'■Bank  of  England,  ^\st  December,  1*795. 

"Pursuant  to  an  order  of  the  court  of  directors,  notice  is  hereby  given, 

"That  no  bills  will  be  taken  in  for  discount  at  this  office,  after  12 
o'clock  at  noon,  or  notes  after  12  o'clock  on  Wednesday. 

"  That  in  future,  whenever  the  bills  sent  in  for  discount  shall  on  any 
day  amount  to  a  larger  sum  than  it  shall  be  resolved  to  discount  on  that 
day,  a  fro  rata  proportion  of  such  bills  in  each  parcel  as  are  not  other- 
wise objectionable,  will  be  returned  to  the  person  sending  the  same, 
without  regard  to  the  respectability  of  the  party  sending  in  the  bills,  or 
the  solidity  of  the  bills  themselves. 

"  The  same  regulations  Avill  be  observed  as  to  notes." 

The  diminution  of  gold;  the  price  of  bullion  compared  with  the  value  ' 
of  coin  ;  the  alarm  occasioned  by  the  position  of  the  country,  still  main- 
taining its  doubtful  struggle  with  an  unscrupulous  enemy ;  the  expensive 
operations  of  the  war,  which  demanded  extensive  loans,  and  the  subsidies 
to  foreio-n  powers,  which  carried  the  gold  out  of  the  country ;  must  be 
accepted  as  reasons  for  the  diminution  of  discounts  which  preceded  the 
panic  of  1797.  Many  competent  persons  have  been  persuaded  that  the 
decrease  of  the  circulation  from  1795,  so  far  from  preventing  what  is  popu- 
larly known  as  a  run  on  the  bank,  possessed  a  contrary  tendency.  They 
asserted  that,  by  reducing  the  requisite  issue,  and  diminishing  the  gene- 
ral accommodation,  a  pressing  demand  for  specie  was.  occasioned.  This 
idea  is  supported  by  the  fact,  that,  from  March,  1792,  to  June,  1793, 
there  was  a  drain  of  cash  and  bullion  considerably  larger  than  in  the  same 
period  during  the  crisis ;  but  instead  of  lowering,  the  directors  raised 
the  amount  of  their  discounts,  and  an  almost  immediate  result  was  an 
increase  of  cash  and  bullion.  There  was  then,  however,  no  distrust  in 
our  political  relations.  The  French  revolution*  had  not  assumed  the  ap- 
pearance which,  in  1797,  shed  a  gloom  over  all  the  continent,  nor  were 
government  called  upon  to  subsidize  half  the  powers  of  Europe  for  the 
sake  of  checking  an  universal  anarchy.  Another  cause  tended  to  alarm 
the  people.     A  man  named  Thomas  Paine  possessed  a  certain  degree 

*  The  blowing  up  of  the  French  currency  of  "  assignats"  was  the  first  and  last  of 
Mr.  Pitt's  triumphs.  When  the  campaign  of  1793  was  commencing,  everj^body  re- 
garded the  conquest  and  dismemberment  of  France  as  certain.  Burke  had  de- 
clared that  she  should  be  "blotted  from  the  map  of  Europe."  Pitt  had  described 
her  as  "  in  the  gulf  of  bankruptcy."  The  pious  king,  with  the  whole  clergy  and 
aristocracy,  had  pronounced  the  "  regicide  government"  to  bo  "  utteily  abandoned 
of  God." — Doubleday's  Financial  Review. 


Diminution  of  Bullion.  ■  119 

of  unenviable  notoriety.  In  1796  he  wrote  an  inflammatory  pamphlet, 
termed  "  The  Decline  and  Fall  of  the  English  System  of  Finance,"  in 
■which  he  attempted  to  prove  that  the  cellars  of  the  Bank  of  England 
"  could  not  contain  so  much  as  two  millions  of  specie  ;  most  probably 
not  more  than  one  million."  The  following  is  a  part  of  the  reasoning  by 
which  he  arrived  at  this  false  conclusion.  After  arguing  that  there  could 
not  be  more  than  sixteen  millions  of  gold  and  silver  coin  in  England,  he 
thus  proceeds  :  "  Bat  admitting  there  be  sixteen  millions,  not  more  than 
a  fourth  part  thereof  can  be  in  London,  when  it  is  considered  that  every 
city,  town,  village  and  farm-house  in  the  nation  must  have  a  part  of  it ; 
and  that  all  the  great  manufactories,  which  most  require  cash,  are  out  of 
London.  Of  this  four  millions  in  London,  every  banker,  merchant, 
tradesman,  in  short,  every  individual,  must  have  some.  He  must  be  a 
poor  shopkeeper  indeed  who  has  not  a  few  guineas  in  his  till.  The 
quantity  of  the  cash,  therefore,  can  never,  on  the  evidence  of  circum- 
stances, be  so  much  as  two  millions  ;  most  probably  not  more  than  one 
million."  The  same  writer  then  endeavored  to  prove  that  the  total 
amount  of  bank  notes  in  circulation  amounted  to  sixty  millions.  These 
assertions,  speciously  supported,  and  put  forward  at  a  time  when  the 
national  anxiety  was  extreme,  produced  considerable  effect  amongst 
those  who  required  support  in  their  faith  in  the  bank.  It  was  the  small 
holder  of  bank  notes  who  most  needed  encouragement,  and  it  was  the 
small  holder  to  whom  this  pamphlet  was  addressed,  and  who  was  most 
particularly  affected  by  it.  At  the  very  period  when  it  was  pronounced 
that  there  was  most  probably  only  one  million  of  specie  in  the  bank,  and 
sixty  millions  of  notes  in  circulation,  it  was  afterwards  proved  that  the 
specie  was  about  three,  and  the  circulation  only  from  nine  to  ten  millions. 
But  the  mere  assertion  that  sixty  millions  were  circulating,  with  only  one 
million  of  cash  to  meet  the  payment,  must  have  produced  a  want  of  con- 
fidence in  the  people  of  England,  by  many  of  whom  the  author  was  re- 
garded as  an  authority.  The  public  mind,  indeed,  was  altogether  agi- 
tated.* Towards  the  close  of  1*796,  and  the  commencement  of  1797,  fears 
of  an  invasion  were  very  prevalent.  Rumors  of  descent  on  various  parts  of 
the  coast  were  freely  propagated.  The  public  were  in  so  feverish  a  state 
that  they  were  inclined  to  believe  all  they  heard,  and  those  possessed  of  pub- 
lic securities  became  anxious  to  receive  gold  in  exchange.     The  occasion 

*  The  aspect  of  public  afiair,s  in  Britain  had  never  been  so  clouded  since  the  com- 
mencement of  the  war,  nor,  indeed,  during  the  whole  of  the  19th  century,  as  they 
were  at  the  opening  of  the  year  1797.  The  return  of-  Lord  Malmesbury  from  Paris 
had  closed  every  hope  of  terminating  a  contest,  in  which  the  national  burdens  were 
daily  increasing,  while  the  prospect  of  success  was  continuallj^  diminishing.  Party- 
spirit  raged  with  uncommon  violence  in  every  part  of  the  empire.  Insurrections 
prevailed  in  many  districts  of  Ireland ;  discontents  and  suffering  in  all.  Commercial 
embarrassments  were  rapidly  increasing,  and  the  continued  pressure  on  the  bank 
threatened  a  total  dissolution  of  public  credit.  The  consequence  of  this  accumula- 
tion of  disasters  was  a  rapid  fall  of  the  public  securities.  The  three  per  cents  were 
sold  as  low  as  51,  having  fallen  to  that  from  98,  at  which  they  stood  at  the  com- 
mencement of  the  contest.  Petitions  for  a  change  of  ministers  and  an  alteration  of 
government  were  presented  from  almost  everj'  city  of  note  in  the  empire  ;  and  that 
general  distrust  and  depression  prevailed,  which  is  at  once  the  cause  and  efifect  of 
public  misfortune. — Alison's  Europe. 


120  Histonj  of  the  Bank  of  England. 

was  a  pressing  one.  The  position  of  the  directors  was  most  responsible. 
The  well-being  of  the  commercial  state  was  at  issue.  The  drain  of  cash 
continued,  and  the  dwindling  coffers  were  difficult  to  replenish.  In  March, 
1796,  the  stock  of  bullion  was  £2,972,000.  By  June  it  had  fallen  to 
£2,582,000.  In  September  it  lowered  to  £2,532,000.  In  December  it  was 
£2,508,000,  and  on  25th  February,  1797,  it  had  fallen  to  £1,272,000. 

Thus  diminished  and  diminishing,  the  directors  had  but  one  course  to 
pursue.  The  government,  which  had  reduced  their  means,  was  alone 
capable  of  supplying  a  remedy.  The  chancellor  of  the  exchequer  was, 
therefore,  made  acquainted  with  their  present  position,  and  with  their 
fears  for  the  future  ;  and  to  his  judgment  was  left  the  proposal  of  a  plan 
to  obviate  the  evil.  It  does  not  appear  that  any  proposition  was  made 
by  the  bank  directors,  but  that  their  danger  was  simply  placed  before 
him.  On  the  24th  of  February,  the  deputy-governor,  with  one  of  the 
directors,  waited  on  him,  to  ask  how  long  the  bank  might  venture  to  pay 
cash  before  he  would  think  it  necessary  to  interfere.  Mr.  Pitt  replied, 
that  it  was  a  matter  of  great  importance,  and  that  he  must  be  prepared 
with  some  resolution  to  bring  before  the  council,  for  a  proclamation  to 
stop  cash  payments  at  the  bank.  At  the  same  time,  he  added,  it  would 
be  necessary  to  appoint  a  committee  of  inquiry  into  their  affairs.  No 
objection  was  offered  to  this  proposition.  On  the  contrary,  it  was  inti- 
mated that  every  assistance  would  be  rendered. 

In  addition  to  foreign  force,  domestic  treachery  was  justifiably  feared. 
Corresponding  societies,  Friends  of  the  People,  and  Jacobin  societies, 
were  spreading  a  poison  and  a  pestilence  through  the  minds  of  the 
nation.  It  was  well  known  that  a  number  of  discontented  men  would 
gladly  hail  the  appearance  of  a  French  fleet  off  the  English  coast.  Ire- 
land was  approaching  an  open  insurrection.  Disaffection  had  seized  upon 
our  seamen.  The  Nore  witnessed  an  open  mutiny.  The  only  defence 
from  invasion  appeared  to  fail  the  country,  and  men  knew  not  where  the 
evil  would  pause,  or  how  far  the  seeds  of  treason  were  spread,  when  that 
navy,  which  was  familiarly  and  affectionately  termed  "  the  wooden  walls 
of  old  England,"  forsook  the  nation  in  its  dark  and  perilous  hour. 

The  fireside  of  the  yeoman  heard  these  things,  and  a  vague  oppressive 
terror  agitated  the  beautiful  homesteads  of  England.  The  difficulties  of 
the  great  London  bank,  the  dissatisfaction  of  the  metropolis,  the  fear  of 
invasion,  the  disaffection  at  the  Nore,  were  exaggerated  in  journals  and 
reported  in  villages,  and  a  feverish  desire  to  hoard  manifested  itself. 
The  small  tradesman  took  his  notes  to  the  banker,  and  kept  the  specie 
in  his  house,  until  the  aspect  of  the  times  was  determined.  The  cottager 
heard  the  report,  caught  the  infection,  and  followed  the  example.  The 
country  banker  grew  anxious,  and  sent  for  gold,  rather  in  proportion  to 
his  fears  than  his  necessities.  The  London  banker  applied  to  the  Bank 
of  England  upon  the  same  principle,  and  thus  the  gold  of  the  corporation 
became  unnecessarily  decreased.  The  inhabitants  of  the  remote  parts  of 
the  empire  are  always  prone  to  needless  alarm.  Their  information  is 
more  vague,  their  judgment  less  cultivated ;  they  are  more  easily  acted 
on  by  reports  than  the  dwellers  in  large  cities  ;  and  thus  a  great  portion 
of  the  notes  were  presented  through  the  groundless  fears  of  an  ignorant 
impulse. 


Suspension  of  Cask  Payments.  121 


CHAPTER  XIII. 

ORDER    IN    COUNCIL SUSPENSION    OF    CASH    PAYMENTS MEETING    OF    THE    MERCHANTS 

P^UILIAMENTARY     DEBATES ISSUE    OF     DOLLARS ENLARGED     DISCOLTVTS    REQUIRED 

THE    RESTRICTION     ACT     PASSED ISSUE    OF     ONE    AND     TWO    POUND     NOTES BANK    OF 

FRANCE THE      REST  RENEWAL     OF      THE      CHARTER OPINION      OF    MR.     PITT     AND 

OTHER    MINISTERS. 

The  evening  of  Saturday,  tbe  24tli  February,  1797,  was  a  gloomy 
period  for  most  of  the  merchants  and  traders  of  London.  More  than 
all  must  the  directors  of  the  bank  have  felt  their  important  and  respon- 
sible position.  They  had  seen  during  the  week  a  heavy  demand  made 
on  their  diminished  cash.  They  had  marked  their  small  stock  of  bullion 
decreasing  day  after  day.  They  had  witnessed  and  participated  in  the 
dismay  which  preyed  upon  the  people.  They  knew  that  the  demand 
would  continue  unless  some  method  could  be  adopted  to  check  it ;  and 
they  felt  that  the  period  had  arrived  when,  for  the  first  time  in  their  his- 
tory, they  must  altogether  cease  payment  of  their  notes ;  for  the  first 
time  since  1697  they  must  fail  in  meeting  the  demands  of  their  creditors. 
On  the  following  day,  Sunday,  a  cabinet  council  was  held  at  Whitehall ; 
and  it  is  said  that  the  only  occasion  on  which  the  monarch  violated  the 
Sabbath  was  this  great  one.  He  attended  the  council  at  this  important 
crisis ;  and  the  presence  of  royalty  gave  a  high  sanction  to  the  proceed- 
ings. Immediately  after  the  meeting,  the  members  of  the  government 
met  the  governor,  deputy-governor,  Mr,  Thornton  and  Mr.  Bosanquet, 
in  Downing-street,  to  inform  them  of  the  result  of  their  deliberation 
when  the  following  resolution  was  communicated  : 

^^  At  the  Council  Chamber,  Whitehall,  Feb.  26,  1797. 

"  Ly  the  lords  of  his  majesty's  most  honorable  privy  council. 

*'Upon  the  representation  of  the  chancellor  of  the  exchequer,  statino- 
that,  from  the  result  of  the  information  which  he  has  received,  and  the 
inquiries  which  it  has  been  his  duty  to  make,  respecting  the  effect  of  the 
unusual  demands  for  specie  that  have  been  made  upon  the  metropolis,  in 
consequence  of  ill-founded  or  exaggerated  alarms  in  different  parts  of  the 
country,  it  appears  that  unless  some  measure  is  immediately  taken,  there 
may  be  reason  to  apprehend  a  want  of  sufficient  supply  of  cash  to  answer 
the  exigencies  of  the  public  service,  it  is  the  unanimous  opinion  of  the 
board,  that  it  is  indispensably  necessary  for  the  public  service  that  the 
directors  of  the  Bank  of  England  should  forbear  issuing  any  cash  in  pay- 
ment until  the  sense  of  Parliament  can  be  taken  on  that  subject,  and  the 
proper  measures  adopted  thereupon  for  maintaining  the  means  of  circu- 
lation, and  supporting  the  public  and  commercial  credit  of  the  kingdom 
at  this  important  conjuncture.  And  it  is  ordered,  that  a  copy  of  this 
minute  be  transmitted  to  the  directors  of  the  Bank  of  England  ;  and 
they  are  hereby  required,  on  the  grounds  of  the  exigency  of  the  case,  to 
conform  thereto,  until  the  sense  of  Parliament  can  be  taken,  as  aforesaid." 


122  History  of  the  Bank  of  England. 

On  Monday  morning,  the  2Vth  of  February,  at  the  earliest  period  of 
commencing  business,  the  office  was  crowded.  Bullion  was  vociferously 
demanded.  The  notes  of  the  bank  were  eagerly  proffered  in  exchange 
for  gold.  The  notice  of  the  previous  day  was  placed  conspicuously  in 
the  hall ;  but  men  will  not  easily  see  that  to  which  it  is  their  interest  to 
be  blind.  Officers  were  in  waiting  to  repress  any  indecent  ebullition  of 
feeling.  Copies  of  the  order  in  council  were  distributed,  and  the  an- 
nouncement of  the  suspension  of  specie  payments  passed  off  as  quietly  as 
its  nature  would  allow.  To  pacify  the  natural  alarm,  the  following 
notice  was  freely  circulated,  and  advertised  in  all  the  daily  papers : 

"  Bank  of  England,  February  2lth,  1797. 
"  The  governor,  deputy-governor  and  directors  of  the  Bank  of  Eng- 
land think  it  their  duty  to  inform  the  proprietors  of  bank  stock,  as  well 
as  the  public  at  large,  thatthe  general  concerns  of  the  bank  are  in  the 
most  affluent  and  prosperous  situation,  and  such  as  to  preclude  every 
doubt  as  to  the  security  of  its  notes.  The  directors  mean  to  continue 
their  usual  discounts  for  the  accommodation  of  the  commercial  interest, 
paying  the  amount  in  bank  notes,  and  the  dividend  warrants  will  be  paid 
in  the  same  manner." 

The  rumor  that  the  bank  had  stopped  payment  spread  throughout 
London.  Those  persons  who  were  unacquainted  with  business  looked 
upon  it  as  tending  to  universal  ruin.  The  better  informed  saw  the  im- 
portance of  the  proceeding,  and,  with  them,  there  was  every  effort  made 
to  support  the  credit  of  the  corporation. 

Notwithstanding  the  terror  which  possessed  the  less  instructed  portion 
of  the  community  ;  notwithstanding  the  severe  language  which  Mr.  Fox 
used  in  the  House,  when  he  said  that  "  the  measure  had  destroyed  the 
credit  of  the  bank ;"  that,  for  the  "  first  time  since  the  revolution,  an  act 
was  done  which  struck  at  the  foundation  of  the  public  credit,  by  seizing 
the  money  belonging  to  individuals ;"  notwithstanding  his  triumphant 
question  of  "  What  can  restore  that  public  credit  ?"  it  appeared  as  if,  now 
that  the  blow  was  struck,  a  feeling  of  security  was  produced,  which  the 
mercantile  community  had  long  required.  For,  notwithstanding  these 
things ;  notwithstanding  even  the  oratory  of  Mr.  Sheridan,  of  which  the 
chancellor  of  the  exchequer  remarked,  "it  would. be  atrocious  arrogance 
in  him  to  attempt  to  answer  what  it  would  be  unpardonable  arrogance  to 
attempt  to  understand ;"  a  great  authority  of  that  day,  Mr.  Henry 
Thornton,  said,  before  a  committee  of  the  House  of  Commons,  "  I  con- 
ceive the  distress,  for  some  time  preceding,  and  especially  for  two  days 
before,  to  have  been  so  great,  that  the  relief  given  by  the  discounts  on 
the  Monday  more  than  compensated,  in  the  minds  of  most  of  the  mer- 
cantile world,  for  any  alarm  occasioned  by  the  stoppage."  Throughout 
the  evidence  of  this  gentleman,  the  conviction  that  the  bank  should  have 
increased  its  circulation,  instead  of  diminishing  it,  was  constantly  ex- 
pressed. The  question  yet  remains  unsettled.  On  the  day  succeeding 
the  suspension,  the  discounts  were  augmented,  and  the  feeling  of  se- 
curity, which  has  already  been  mentioned,  confirms  the  opinion  of  Mr. 
Thornton. 

A  meeting  of  the  merchants  was  promptly  called,  and,  on  the  27th  of 


Decrease  of  Discounts — Opinions  on  it.  123 

February,  they  proved  their  desire  to  support  the  credit  of  the  bank,  by 
voting  the  following : 

^^  Resolved,  unanimously ,  That  we,  the  undersigned,  being  highly  sensi- 
ble how  necessary  the  preservation  is  of  public  credit  at  this  time,  do 
most  readily  hereby  declare,  that  we  will  not  refuse  to  receive  banlc  notes 
in  payment  of  any  sum  of  money  to  be  paid  to  us,  and  we  will  use  our 
utmost  endeavors  to  make  all  our  payments  in  the  same  m.anner." 

The  "  Gentleman's  Magazine,^''  speaking  of  the  above,  says,  "  We 
never  remember  to  have  witnessed  a  more  loyal  meeting ;"  four  thou- 
sand of  the  best  names  in  the  city  were  soon  attached  to  this  resolution. 
On  the  following  day  a  paper,  nearly  similar,  which  was  published  by 
the  lords  of  the  privy  council,  tended  greatly  to  relieve  the  public  mind, 
and  confidence,  to  some  extent,  was  restored. 

On  the  25th  of  February  the  discounts  were  reduced  to  one-fourth  of 
the  sum  at  which  they  stood  in  the  beginning  of  the  year,  and  the  de- 
creased accommodation  of  the  bank  compelled  a  similar  decrease  in  the 
discounts  of  the  private  banker.  This  joint  restriction,  at  the  very  crisis 
when  an  increase  was  desirable,  tended  to  augment,  if  not  to  produce,  the 
demand  for  cash.  The  advances  made  to  Mr.  Pitt  were  specially  as- 
serted by  the  governor  to  have  originated  the  embarrassments.  The 
voluminous  correspondence,  which  has  been  abridged,  amply  proves  that 
it  was  of  the  utmost  importance  for  the  bank  directors  to  be  relieved  from 
the  incessant  claims  of  the  chancellor  ;  the  urgent  tone  of  their  letters,  and 
the  earnest  appeals  of  their  personal  representatives,  are  only  to  be  equalled 
by  the  demands  of  Mr.  Pitt.  But  the  energy  of  his  applications  to  the 
loyalty  of  the  directors  almost  demonstrates  that  the  continuance  of  their 
advances  was  imperatively  required  for  the  safety  of  the  commonwealth. 
Many  of  the  practical  men,  besides  Mr.  Thorxton,  summoned  before  the 
committee  of  the  House  of  Commons,  considered  the  great  diminution  of 
discounts  as  the  cause  of  the  run  upon  gold,  and  thus,  indirectly,  blamed 
the  policy  of  the  bank.  It  must  be  remembered  that  the  directors  were' 
in  a  critical  position.  An  embarrassed  government  urged  them  to  make 
advances  for  the  safety  of  the  country.  Extensive  mercantile  operations 
demanded  extensive  discounts.  To  meet  both  demands  was,  in  their 
opinion,  imprudent.  Every  reason  which  could  operate  tended  to  the 
former.  The  extracts  from  the  correspondence  with  the  chancellor  of 
the  exchequer  prove  that  it  was  no  servile  wish  to  court  a  powerful 
friend,  but  a  positive  necessity,  wrung  from  them  by  the  pressure  of  the 
application. 

"In  the  evidence  before  the  secret  committee,  Mr.  Walter  Boyd  says  : 
"  I  attribute  the  drain  chiefly  to  that  line  of  conduct  which,  I  believe,  the 
directors  of  the  bank  have  pursued  since  the  month  of  December,  1795, 
when  they  announced  to  the  public,  by  an  advertisement,  certain  changes 
in  the  quantity  and  manner  of  conducting  their  business  of  discount." 
"  The  diminution  of  discounts  has  diminished  the  powers  of  commercial 
houses,  and  diminished  the  value  of  public  securities."  Mr.  Henry 
Thornton  remarked,  "It  was  the  want  of  bank  notes,  and  not  of  guineas, 
that  had  been  felt,  and  no  anxiety  seemed  to  be  entertained  in  the  city, 
if  bank  notes  were  brought  into  circulation,  respecting  the  manner  of  con- 


124  History  of  the  Bank  of  Enfjland. 

trivingto  effect  tlie  smaller  payments."  On  another  occasion  this  gentle- 
man expressed  his  conviction  that,  if  the  quantity  of  bank  notes  had  re- 
mained as  they  were,  or  without  any  material  alteration,  the  inconven- 
ience would  have  resulted,  though  in  a  less  degree,  as  the  increased  trans- 
actions of  commerce  required  an  increased  circulation.  This  gentleman  also 
stated  that  an  enlarged  number  of  notes,  proportioned  to  the  occasion  for 
them,  would  prevent  a  demand  for  guineas ;  but  if  fewer  notes  were  issued 
than  the  mercantile  world  required,  it  would  occasion  a  demand  for  gold. 
The  measure  had  now  to  be  justified  and  reported  to  the  House  of 
Commons. 

On  the  evening  of  the  day  that  this  announcement  was  issued  to 
the  public,  Mr.  Pitt  brought  down  a  message  from  his  majesty,  to 
the  "  experienced  wisdom  and  firmness  of  his  Parliament."  At  the 
same  time  he  announced  his  conviction  that  the  resources  of  the  bank 
were  most  abundant,  and  proposed,  as  an  aid  to  public  faith,  to  give  the 
security  of  the  State  to  its  engagements.  The  rhetoric  of  Mr.  Fox,  and 
the  oratory  of  Mr.  Sheridan,  were  employed  to  reprobate  the  course  of 
the  ministry  :  but  rhetoric  and  oratory  are  feeble  assailants  when  truth 
and  justice  arc  opposed  to  them.  On  the  following  day  tbe  message  was 
taken  into  consideration,  and  a  motion  carried  for  a  committee  to  ascer- 
tain the  aflairs  of  the  company.  Mr.  Fox  again  attacked  the  policy  of 
Mr.  Pitt  with  vehement  eloquence,  and  in  the  same  speech  gave  due 
credit  to  the  conduct  and  importance  of  the  bank.  He  added :  "  The 
effect  of  this  measure  I  will  not  describe  by  saying  that  it  has  impaired — 
that  is  but  a  weak  word — it  has  destroyed  the  credit  of  the  bank."  "  For 
the  first  time  since  the  Revolution  an  act  has  been  done  in  the  king's 
name  which  has  struck  at  the  foundation  of  the  public  credit,  by  seizing 
the  public  money,  belonging  to  individuals,  deposited  in  the  public  treas- 
ury of  the  public  creditor."  No  time  was  lost  by  the  committee ;  and 
on  the  3d  of  March  they  reported  "  that  the  total  amount  of  demands  on 
the  bank,  on  the  25th  February,  was  £13,'7'70,390,  and  that  the  total 
amount  of  funds  (not  including  £11,686,800  due  from  government)  was 
£17,597,280  ;  leaving  a  surplus  of  £3,826,890,  exclusive  of  the  govern- 
ment debt." 

The  necessity  of  an  issue  of  notes  under  £5  being  greatly  felt  by  the 
commercial  interest,  an  act  was  passed  by  the  3d  of  March,  authorizing 
it;  and  by  the  10th  of  the  same  month  notes  for  £1  and  £2  were  ready 
for  delivery.  The  country  bankers  also  circulated  notes  under  £5,  owing 
to  the  repeal  of  the  act  passed  in  1777.        ' 

The  report  of  the  secret  committee  had  satisfied  the  minds  of  the  most 
doubtful,  but  among  the  less  informed  branches  of  the  community  great 
uneasiness  continued.  Some  anxiety  was,  therefore,  relieved  when  the 
following,  bearing  date  the  6th  of  March,  appeared  :  "  In  order  to  accom- 
modate the  public  with,  a  further  supply  of  coin  for  small  payments,  a 
quantity  of  dollars,  which  have  been  supplied  by  the  bank,  and  stamped 
at  the  mint,  are  now  ready  to  be  issued  at  the  bank,  at  the  price  of  4s.  6d. 
per  dollar,  and  a  further  quantity  is  preparing." 

A  discovery  was  made,  however,  in  time  to  prevent  the  issue.  It  was 
found  that  4s.  6d.  would  be  2d.  under  their  value  in  the  market  as  bul- 
lion ;  and  this  great  error  was  rectified  by  the  following  notice  on  the 


Issue  of  Dollars — Extension  of  Discounts.  125 

9th  of  March :  "In  consequence  of  its  appearing  to  be  the  general  opin- 
ion that  the  dollars  will  be  more  conveniently  circulated  at  the  rate  of 
4s.  9d.  than  at  that  of  4s.  6d.,  notice  is  hereby  given,  that  dollars  are  now 
ready  to  be  delivered  at  4s.  9d.  per  dollar."  The  dollars  were  Spanish, 
and  bore  a  small  king's  head  stamped  on  the  Spanish  king's  neck. 

The  debates  in  the  senate  attracted  attention  ;  and  the  public  mind, 
ready  to  start  at  shadows,  was  depressed  by  the  language  of  the  opposi- 
tion. The  enemies  of  the  ministry  had  sought  to  depreciate  the  value  of 
bank  paper;  the  announcement,  therefore,  that  dollars  would  be  issued  in 
exchange,  created  great  satisfaction  to  the  holders  of  notes.  On  the  first 
morning  appointed  for  their  delivery  the  office  was  crowded  with  appli- 
cants; the  cashiers  saw  the  public  several  deep  waiting  for  dollars;  the 
usual  striving  and  struggling  which,  to  the  present  day,  distinguishes  the 
claim  for  cash,  was  acted,  and  many  had  to  wait  some  hours  before  they 
could  be  supplied.  The  knowledge  that  the  bank  was  filled  with  claim- 
ants increased  the  alarm  of  others.  The  following  days  witnessed  the  same 
scene;  but,  as  there  appeared  no  hesitation  in  supplying  all  the  applica- 
tions, and  as  there  seemed  no  want  of  the  metal,  the  claims  soon  abated. 

The  report  of  the  committee  gradually  produced  its  proper  effect;  and 
the  call  for  dollars  decreased  every  day.  In  less  than  a  month  the  de- 
mand was  measured  by  the  wants  and  not  the  fears  of  the  people ;  and 
on  the  31st  of  October,  1V97,  these  dollars,  of  which  2,325,099  had  been 
issued  in  eight  months,  were  called  in.  Since  their  circulation  a  large 
number  had  been  imported  into  the  country,  and  stamped  in  resemblance 
of  those  sent  from  the  mint.  When  the  latter  were  paid  in  it  was  al- 
most impossible  to  distinguish  the  true  from  the  false ;  and  after  some 
vain  and  futile  attempts  to  do  so,  the  bank  were  compelled  to  receive,  with- 
out discrimination,  all  stamped  dollars  at  43.  9d. 

Notwithstanding  the  increased  accommodation  granted  to  the  mercan- 
tile interest  on  the  27th  of  Februar)',  and  stated  by  Mr.  Thornton  to  have 
more  than  balanced  the  distrust  occasioned  by  the  cessation  of  payments 
in  specie,  it  appears  to  have  been  generally  considered  that  the  increased 
amount  of  business  demanded  enlarged  discounts.  A  meeting,  therefore, 
at  which  the  principal  merchants  attended,  took  place  at  the  London  Tav- 
ern. Mr.  Alderman  Lushington  presided,  and  some  resolutions,  of  which 
the  following  are  the  heads,  were  agreed  to  :  "That  the  accommodation 
aff"orded  by  the  Bank  of  England,  in  discount  of  bills  and  notes,  is  inade- 
quate to  the  present  extended  commerce  of  the  country."  "That  without 
an  extension  of  the  circulating  medium  of  the  kingdom,  by  discount  of 
mercantile  bills  and  notes,  the  general  commerce  of  the  country  will  be 
exposed  to  the  most  serious,  immediate  and  alarming  evil."  "  That  the 
recent  mark  of  confidence  reposed  in  the  Bank  of  England  by  the  respecta- 
ble association  for  receiving  their  notes,  notwithstanding  the  order  of 
council  of  26th  February,  has  given  the  merchants  and  traders  a  fair  claim 
to  reasonable  and  necessary  accommodation." 

On  the  24th  March  another  meeting  was  held,  at  which  it  was  resolved, 
"That  in  the  opinion  of  this  meeting,  the  capital  employed  in  the  export 
and  import  trade  of  Great  Britain  has  amounted,  on  an  average  of  the 
last  six  years,  to  forty-five  millions  per  annum  ;  and  that  there  is  always 
two  months'  supply  of  this  merchandise  in  the  custody  of  the  merchants 
9 


126  History  of  the  Bank  of  England. 

and  traders,  and  that  a  discount  accommodation  to  such  proportion  may 
be  afforded  without  risk,  backed  by  this  security."  These  resolutions 
were  forwarded  to  the  directors  of  the  bank ;  but  the  reply  was  not  con- 
sidered satisfactory.  On  the  following  week  a  third  meeting  was  held, 
at  which  it  was  resolved,  "  That  though  well  satisfied  with  the  sentiments 
expressed  by  the  bank,  they  considered  that  the  practice  of  discounts 
should  be  extended  upon  the  scale  mentioned  at  the  previous  meeting." 

The  reply  of  the  bank  directors  to  these  resolutions  was  to  the  effect 
that  they  declined  pledging  themselves  to  any  specific  sum  ;  that  though 
they  were  perfectly  apprised  of  the  larger  discounts  required  by  the  trade 
of  the  country,  it  would  be  impossible  to  meet  the  views  expressed  in  the 
resolutions  until  government  had  paid  off  a  considerable  portion  of  the 
debt  due  to  them.  But  should  this  occur,  they  would  have  a  greater 
latitude,  and  feel  strongly  inclined  to  avail  themselves  of  it  in  favor  of  the 
merchants. 

On  the  3d  of  May,  notwithstanding  the  great  opposition  made,  and 
the  blame  thrown  on  government,  "  The  Bank  Restriction  Act"  was 
passed.  This,  which  is  the  37th  George  III.,  is  entitled  "An  act  for 
continuing  for  a  limited  time  the  restriction  contained  in  the  minute  of 
council  of  26th  of  February,  1797."  By  it  the  bank  directors  were  not 
permitted  to  issue  cash  except  for  sums  under  twenty  shillings.  But  if 
any  person  lodged  specie  in  the  bank,  he  might  be  repaid  to  the  extent 
of  three-fourths  of  the  sum  lodged,  if  it  exceeded  £500.  The  directors 
were  also  allowed  to  advance  to  the  bankers  any  sum  not  exceeding  alto- 
gether £100,000.  They  were  also  permitted  to  lend  £25,000  each  to 
the  bank  and  Royal  Bank  of  Scotland.  The  act  was  only  to  remain  in 
force  till  the  24th  of  June.  On  the  22d  of  that  month,  however,  another 
was  passed,  continuing  the  restriction  of  cash  payments  until  one  month 
after  the  commencement  of  the  following  session ;  and  in  November  a 
third  act  was  passed,  limiting  it  to  the  somewhat  indefinite  period  of  six 
months  after  the  conclusion  of  the  war. 

On  the  l7th  of  November,  a  report  from  the  committee  of  secrecy  was 
ordered  to  be  printed,  of  which  the  following  is  an  abstract.  The  total 
amount  of  outstanding  demands  on  the  bank  on  the  11th  of  November, 
was  £17,578,910,  while  the  funds  for  discharging  the  same,  (not  includ- 
ing £11,686,800  due  from  government,)  was  £21,418,460.  The  bankers 
and  traders,  who  might  have  claimed  three-fourths  of  their  deposits  in 
cash,  had  only  demanded  one-sixteenth.  Notwithstanding,  however, 
all  these  favorable  circumstances,  the  committee  concluded  by  saying, 
*'  they  were  led  to  think  it  would  be  expedient  to  continue  the  restric- 
tion," from  the  political  circumstances  of  the  period. 

The  last  act  was  deemed  politic  by  the  government ;  but  a  court  of 
proprietors  was  held  in  the  same  month  ;  and  Mr.  Raikes,  after  saying, 
that  by  the  report  of  the  secret  committee,  there  was  a  net  balance  in 
favor  of  the  bank,  exclusive  of' the  government  stock  of  £3,839,000, 
added,  that  the  bank  was  in  so  afiluent  a  state  as  to  be  ready  to  pay  all 
the  demands  on  it  in  specie  whenever  called  upon.  The  consent  of  the 
proprietors  was  also  asked  for  advancing  the  amount  on  the  land  and 
malt  tax  of  .£2,750,000,  which  was  unanimously  agreed  to. 

By  the  act  passed  in  November,  the  power  of  paying  in  cash  was 


Political  Causes — Bank  of  France.  127 

taken  from  the  hands  of  the  directors.  The  ministers,  viewing  it  princi- 
pally in  a  political  light,  and  regarding  the  war,  which  was  then  furiously 
raging,  as  one  which  was  almost  as  doubtful  as  it  was  determined,  adopted 
the  policy,  which,  whatever  its  faults,  led  to,  if  it  did  not  produce,  some 
of  the  finest  results  which  ever  inspired  the  pen  of  the  historian.  Let  it 
be  remembered  that,  during  the  whole  of  the  time,  prohibitory  of  casli 
payments,  we  were  waging  a  fierce  but  eminently  triumphant  contest 
with  a  memorable  spirit  and  with  a  memorable  man.  The  spirit  was 
that  of  the  French  revolution  ;  the  man  was  Napoleon  Bonaparte. 
Let  us  remember,  also,  that  during  the  existence  of  that  system,  which  has 
been  so  much  censured,  we  were  alone  in  the  contest  with  him,  whose 
name  was  for  many  years  synonymous  with  success.  The  thunders  of 
the  Vatican  were  silenced.  The  military  pride  of  Prussia  was  humbled. 
The  power  of  Austria  lay  prostrate  at  his  feet.  Kussia  embraced  the 
universal  conqueror.  England  stood  alone  in  her  resolute  defiance.  She 
strengthened  the  weak  and  encouraged  the  wavering.  Wherever  the 
free  spirit  of  a  people  arose,  her  gold  gave  strength  to  their  arms  ;  her 
wisdom  enlightened  their  councils.  Her  navy  swept  the  seas,  and  crip- 
pled the  commerce  of  her  adversary.  And  when  her  unconquerable 
resolution  once  more  stirred  the  prostrate  powers  of  Europe — when, 
through  her  exertions,  "  the  little  island  of  St.  Helena  confined  him,  for 
whom  a  world  was  once  too  small,"  the  law  passed  in  1797  was  in  active 
existence.  These  things  are  not  written  to  defend;  they  are  only  penned 
to  mitigate  the  wrath  which  has  been  poured  upon  the  bank  restriction 
act.  Extraordinary  events  require  extraordinary  measures,  and  our  his- 
tory from  1797  to  1815  is  unsurpassed  in  the  annals  of  nations. 

The  haste  wuth  which  the  one  and  two  pound  notes  had  been  executed, 
together  with  the  ease  with  which  they  were  received  by  the  public,  pro- 
duced extensive  forgeries.  In  January,  1799,  the  bank  advertised  that 
all  notes  of  the  above  amount,  dated  before  July,  1798,  might  be  received 
in  cash,  or  exchanged  for  new  notes,  and  that  all  odd  sums  not  exceeding 
£5,  might  be  received  in  specie.  The  first  fruits  of  the  restriction  on 
cash  payments  occurred  this  year,  as  the  proprietary  received  a  bonus  of 
ten  per  cent,  on  their  capital  in  five  per  cents,  1797. 

It  is  curious,  and  sometimes  not  uninteresting,  to  notice  in  wTiat  man- 
ner other  establishments  have  acted  under  similar  circumstances.  In 
Januar}^,  1814,  the  national  bank  of  France  experienced  a  demand  for 
bullion.  The  star  of  Napoleon  was  on  the  wane  ;  the  climate  of  Kussia 
had  destroyed  the  confidence  in  his  success.  He  was  engaged  in  a  des- 
perate strife  with  those  he  had  so  often  subdued  ;  and  the  conviction  was 
felt  that  the  glory  had  departed  from  him.  The  holders  of  the  notes  of 
the  French  bank,  uncertain  how  far  a  change  of  dynasty  might  afiect 
them,  went  eagerly  to  require  payment  in  gold,  until  £600,000  only  re- 
mained.  With  the  sanction  of  the  emperor,  the  bank  determined  not 
to  pay  more  than  £20,000  a  day  ;  and  to  eff'ect  this,  the  prefect  of  police 
announced  that  no  one  might  apply  for  gold  unless  he  should  be  the  bearer 
of  a  number,  to  be  supplied  him  by  the  mayor  of  his  quarter. 

It  has  already  been  seen  that  the  government  were  constantly  pressed 
for  money,  and  in  1798  an  act  was  passed  to  legalize  voluntary  contribu- 
tions for  carrying  on  the  war.     Merchants  and  manufacturers  vied  with 


128  History  of  the  Bank  of  England. 

each  other  in  subscribing.  A  temporary  office  was  erected  under  the 
east  piazza  of  the  Royal  Exchange  to  receive  contributions.  The  Bank 
of  England  offered  £200,000;  the  city  of  London  gave  £10,000.  The 
place  was  filled  with  all  classes  and  conditions,  eagerly  crowding  to  con- 
tribute. £300,000  were  remitted  from  India,  witii  the  promise  of  a 
similar  annual  repetition  during  the  war ;  and  upwards  of  two  millions, 
exclusive  of  this  sum,  were  contributed  to  support  the  dignity  of  the 
empire  against  the  aggressions  of  the  enemy. 

Iho  question  of  preserving  the  rest*  was  disputed  in  1798,  by  a  por- 
tion of  the  proprietors.  The  maintenance  of  a  reserved  capital  has  been 
argued  in  another  place,  and  time  has  tested  its  wisdom.  A  strenuous 
exertion  was,  however,  made  by  Mr.  Allardyce,  who  published  a  quarto 
volume,  and  called  courts  of  proprietors  to  his  aid,  to  compel  the  division 
of  this  fund.  The  question  is  a  simple  one  ;  and  as  the  proprietor  de- 
rives part  of  his  half-yearly  interest  from  the  reserved  capital,  while  the 
value  of  the  stock  is  in  some  proportion  to  it,  he  has  no  just  cause  of 
complaint.  Should  such  a  proposal  ever  be  carried  out,  the  price  of  the 
stock  would  be  deteriorated,  and  the  dividends  would  vacillate  as  they 
did  a  century  and  a  half  ago.  A  great  fraud  like  that  of  Astlett,  or  a 
series  of  colossal  forgeries  like  Fauntleroy's,  might  engross  the  whole 
of  the  half  year's  profits,  and  send  the  proprietors  from  their  half-yearly 
meeting  discontented  and  without  a  dividend. 

The  reasons  which  actuated  Mr.  Samuel  Thornton,  then  governor, 
and  the  court  of  directors,  to  moot  the  renewal  of  the  charter  at  so  earlyf 
a  period  as  1800,  when  it  had  twelve  years  to  run,  are  to  be  found  in  the 
acknowledgment  that  they  considered  it  a  favorable  moment,  because 
ministers,  pressed  by  the  expenses  of  the  war,  were  disposed  to  accept  terms 
which,  under  more  favorable  auspices,  would  be  rejected.  For  more 
than  a  hundred  years  the  name  of  Thornton  appears  in  the  list  of  the 
direction,  and  the  house  of  Thornton  constantly  occupied  an  important 
mercantile  position.  During  the  governorship,  therefore,  of  such  a  man, 
with  whom  the  capacity  of  direction  was  almost  hereditary,  there  was 

*  Or  balance  of  undivided  profits. 

■j-  The  widest  and  most  comprehensive  experience  shows,  that  no  set  of  men 
have  over  been  invested  with  the  power  of  making  unrestricted  issues  of  paper 
money  without  abusing  it ;  or,  which  is  the  same  thing,  without  issuing  it  in  inordi- 
nate quantities.  Should  the  power  to  supply  the  State  with  paper  money  be 
vested  in  the  managers  of  a  private  banking  company,  then  to  suppose  that  they 
should,  by  limiting  their  issues,  endeavor  constantly  to  sustain  the  value  of  their 
paper,  would  really  be  to  suppose  that  they  should  be  extremely  attentive  to  the 
public  interests,  and  extremely  inattentive  to  their  own. 

It  is  quite  certain,  that  the  re-enactment  of  the  restriction  on  cash  payments  by 
the  Bank  of  England,  and  the  rendering  of  it  perpetual,  would  not  have  the  least 
eflfect  on  the  value  of  our  paper  currency,  provided  its  quantity  was  not  at  the 
same  time  increased.  *  *  *  In  this  quarter  of  the  world  we  are  much  too 
eager,  in  the  pursuit  of  fortune,  to  be  in  any  degree  affected  by  such  scruples.  It 
is  indispensable,  therefore,  that  the  issuers  of  paper  money  should  be  placed  under 
some  efficient  check  or  control ;  and  the  comparative  steadiness  of  the  value  of  the 
precious  metals  at  once  suggests,  that  no  check  can  be  so  effectual  as  to  subject  the 
issuers  of  paper  money  to  the  obligation  of  exchanging  their  notes,  at  the  pleasure 
of  the  holder,  for  a  given  and  unvarying  quantity,  either  of  gold  or  silver. — Edin- 
burgh Review,  1825,  p.  266. 


Opinions  of  Statesmen.  129 

every  chance  of  the  bank  receiving  its  due  proportion  of  justice  from  the 
government.  The  period  also  was  propitious.  The  services  rendered 
by  the  bank  to  the  State  had  been  so  important  that  Mr.  Pitt,  in  all  his 
pride  of  place,  was  compelled  to  acknowledge  their  necessity.  They 
were  so  recent  that  they  could  not  be  forgotten.  The  ministry  to  which 
they  had  been  rendered  were  still  in  power,  and  still  compelled  to  seek 
assistance ;  and,  to  crown  all,  the  undeniable  fact  that  the  bank  had 
stopped  payment  through  its  endeavors  to  aid  government,  was  in  the 
remembrance  of  every  one.  These,  then,  were  claims  to  a  just  consider- 
ation, the  remembrance  of  which  was  calculated  to  lead  to  a  fair  and 
favorable  result.  The  reasons  assigned  by  Mr.  Thornton,  in  the  House 
of  Commons,  were  to  the  following  effect :  That  the  first  overtures  had 
come  from  the  governor  and  directors,  because  they  were  convinced  that 
a  renewal  at  such  a  period  would  prove  of  utility  to  the  bank  and  the 
country.  A  motion  had  been  made  for  the  establishment  of  a  rival  bank. 
Meetings  had  been  held ;  endeavors  had  been  made ;  pamphlets  had  been 
written  in  its  support ;  and  the  renewal  of  the  charter  would  be  the  most 
effectual  check  to  so  idle  a  measure. 

But  no  considerations  have  ever  prevented  a  ministry  from  making  a 
good  bargain  with  a  bank.  It  has  grown  into  a  habit,  and  custom  is  too 
often  a  cloak  for  injustice.  In  1708,  when  the  charter  was  renewed  for 
twenty-two  years,  the  renewal  was  paid  for  with  a  loan  of  £400,000,  with- 
out interest,  and  the  cancelling  of  a  million  and  a  half  of  exchequer  bills. 
In  1713,  when  found  expedient  to  extend  it  for  a  further  ten  years,  the 
bank  undertook,  in  return,  to  circulate  nearly  a  million  and  a  quarter 
more  of  these  bills.  In  1742,  on  a  renewal  of  twenty-tv/o  years, 
£1,600,000  were  lent,  without  interest,  in  perpetuity.  The  year  1764 
witnessed  an  equal  exertion  of  the  screw,  and,  for  a  further  extension  of 
a  similar  period,  £110,000  were  paid,  and  one  million  lent  to  govern- 
ment. In  1781  a  loan  of  two  millions  for  three  years  was  claimed  for 
the  same  service.  That  statesmen  regarded  these  agreements  with  the 
eyes  of  traders,  is  evident,  from  a  remark  of  Mr.  Geenville,  that  "  he 
thought  the  last-named  contract  a  good  bargain  for  the  nation."  But  is 
this  the  light  in  which  such  matters  should  be  regarded  ?  Is  it  worthy  a 
great  nation  to  fly  to  a  corporate  body  in  the  hour  of  need,  and,  when 
met  honorably  and  liberally  with  the  requisite  supplies,  to  turn  around 
and  bargain  like  a  miser  with  its  benefactor  ?  Is  it  befiting  the  charac- 
ter of  a  great  statesman  to  make  a  company  pay  a  tax  for  their  charter, 
and  then,  in  the  time  of  panic  and  peril,  demand  increased  assistance, 
which  carries  danger  and  distress  with  it  ?  The  government  either  have 
no  right  to  claim  payment  for  the  privileges  they  grant,  or  they  have  no 
right  peremptorily  to  demand  further  assistance.  It  has  been  already 
seen  that  Mr.  Montague  and  Lord  Godolphin  were  decidedly  of  opinion, 
"  that  no  fine  ought  to  be  expected  for  a  renewal."  This  is  the  principle 
they  propounded  ;  but  this  is  not  the  principle  upon  which  their  succes- 
sors have  acted.* 


*  War  and  Suspension  of  Payment. — Mr.  J.  W.  Gilbart,  in  his  testimony  before  Sir 
Robert  Peel,  in  1843,  being  cross-questioned  on  this  ticklish  topic,  gave  the  follow- 
ing veritable  and  manly  explanation:    "  If  I  were  prime-minister,  I  would  imme- 


130  History  of  the  Bank  of  England. 

For  the  renewal  of  the  charter,  in  1800,  the  bank  proposed  to  lend 
three  millions  for  six  yeas,  without  interest — a  right  being  reserved  to 
them  of  claiming  re-payraent  at  any  time  before  the  expiration  of  six 
years,  if  consols  should  be  at  or  above  eighty  per  cent.  In  the  event  of 
such  re-payment,  they  were  to  allow  six  per  cent,  per  annum  on  the  sum 
re-paid,  for  such  part  of  the  six  years  as  might  remain.  This  proposal 
was  deemed  liberal  by  Mr.  Pitt,  who  considered  the  profits  to  amount 
to  six  or  seven  hundred  thousand  pounds  "  on  dr}'  calculation,"  and  not 
the  actual  gain,  which  would  probably  be  much  more.  In  return  for 
this  payment,  Mr.  Pitt  expressly  enumerated,  among  the  advantages 
to  be  enjoyed,  and  for  which  they  made  the  government  a  remuneration, 
that  of  holding  the  public  balances  in  their  possession.  This  minister 
stated  that  "  the  public  had  derived  great  assistance  by  the  aid  of  the 
bank,  and  would  do  so  again  under  any  similar  pressure."  Such  was 
the  opinion  of  William  Pitt — such  was  the  persuasion  of  Lord  North 
— such  was  the  declaration  of  Mr.  Grenville — at  the  renewal  of  each 
successive  charter.  Yet,  at  each  period,  a  heavy  sum  has  been  claimed ; 
and,  in  the  present  instance,  six  or  seven  hundred  thousand  pounds  were 
paid  by  the  proprietors  of  the  Bank  of  England  for  the  privilege  of  bene- 
fiting the  people  of  Great  Britain ;  and  it  will  be  seen,  at  a  later  period, 
that  the  State  made  a  further  claim  upon  the  bank  many  years  before  the 
charter  had  expired.* 

diately,  on  the  commencement  of  war,  issue  an  order  in  council  for  the  bank  to  stop 
payment.  I  stated,  also,  that  I  spoke  as  a  politician,  not  as  a  banker.  The  only 
war  that  has  occurred,  in  my  memory,  is  the  war  of  twenty  years  with  France  ; 
that  is  the  war  to  which  I  referred.  Now,  under  such  a  war  as  that,  it  appeared  to 
me  that  a  suspension  of  payments  would  be  advisable.  I  recollect,  some  time  ago, 
investigating  the  circumstances  attending  the  suspension  of  1797.  I  came  to  the 
conclusion  that,  under  the  circumstances,  a  suspension  of  cash  payments  was  not  a 
matter  of  choice,  hut  of  necessity.  That  is  the  opinion  at  which  I  arrived,  after  a 
careful  investigation  of  the  circumstances." 

*  The  leading  financial  and  commercial  features  of  the  half  centurj^,  ending  with 
this  period,  (1800,)  were  as  follows  : 

1751. — An  act  of  Parliament  (1751,  24  Geoege  II.)  orders  the  Gregorian  (or  new) 
style  to  be  used  in  Great  Britain.  Canal  from  Stockholm  to  Gottenburg  finished. 
Treaty  of  commerce  between  England  and  Spain.  1753. — Two  thousand  bales  of 
cotton  exported  by  Jamaica.  1754. — Commencement  of  war  between  England  and 
France,  and  military  operations  under  Washington,  in  Virginia,  <fec.  1756. — Play- 
ing cards,  in  England,  first  paid  a  stamp  duty.  1757. — The  manufacture  of  brocade 
was  established  at  Lyons.  1758. — New  taxes  levied  on  houses  and  windows  in 
England.  1759. — The  Bank  of  England  issued  £15  and  £10  notes,  31st  March. 
Thread  and  gauze  manufactures  begun  at  Paisley.  First  improvement  of  the  stock- 
ing-loom. 1760. — Culture  of  silk  commenced  in  Connecticut.  Conquest  of  Canada 
from  the  French,  by  the  English. 

1761 — 1770. — Opening  of  the  Duke  of  Bridgewater's  Canal,  (1761,)  between 
Manchester  and  Liverpool.  The  Royal  Exchange,  Edinburgh,  finished.  Ark- 
wright's  first  patented  spinning-frame.  1762. — The  Island  of  Cuba  surrendered  to 
Lord  Albemarle  and  Admiral  Pococke.  Martinique,  St.  Lucia,  St.  Vincent  and 
other  islands  taken  from  the  French.  1763. — Commercial  crisis  in  Amsterdam  and 
Hamburg.  1764. — First  improvement  of  steam-engine,  by  Watt.  Bank  of  Eng- 
land charter  renewed.  1765. — Stamp  Act  for  America  passed  by  the  British  Par- 
liament, 22d  March.  Bank  of  Berlin  established.  1766. — American  Stamp  Act  re- 
pealed. 1767. — The  House  of  Commons  resolved  to  impose  duties  on  various  arti- 
cles imported  into  America.     1768. — Art  of  bleaching  introduced  into  England, 


Financial  Features  of  the  Nineteenth  Century.  131 

from  Holland.  1769. — Failure  of  the  French  East  India  Company,  followed  by 
commercial  distress  in  France.     1*770. — Botany  Bay  discovered  by  Captain  Cook. 

1771 — 1780. — Arkwright's  second  patent  (1771)  for  his  improvement  in  cotton 
spinning.  Manufacture  of  calico  begun  in  Lancashire.  Return  of  Captain  Cook, 
June  12.  Culture  of  silk  commenced  in  Pennsylvania.  1772. — Bridgewater  Canal 
passage  boats  established.  Lloyd's  Coffee-House  established.  Commercial  panic 
in  London,  caused  by  the  failure  of  Neale,  Fordyce  &  Co.,  bankers.  1773. — Tea 
destroyed  in  Boston  harbor,  16th  November.  The  governor  of  Bengal  made  gov- 
ernor of  all  the  British  settlements  in  India.  Exportation  of  cotton  machinery  from 
England  prohibited.  British  Cast  Plate  Glass  Company  chartered  in  England. 
1774. — The  petition  of  the  Massachusetts  Assembly  to  Parliament,  presented  (Janu- 
ary) by  Dr.  Franklin,  who  was  then  removed  from  the  office  of  deputy  postmaster- 
general  for  the.  colonies.  Burke's  celebrated  speech  on  the  tea  tax,  April  19, 
1774. — Watt,  in  partnership  with  Boulton,  founds  his  steam-engine  establishment 
at  Soho.  Stamp  duties  introduced  into  Ireland.  Bromberg  Canal,  uniting  the 
Oder  and  the  Vistula,  finished.  1776. — Captain  Cook  sailed  on  his  third  voyage. 
1777. — Dr.  DoDD  executed  for  forgery.  The  Mont  de  Piet6,  Paris,  established. 
1778. — Cutlery  manufactured  extensively  at  Sheffield.  1780. — Charter  of  the  first 
Bank  of  North  America,  approved  by  Congress  26th  May.  English  lottery 
granted  to  raise  £12,000,000.  Exportation  of  woollen  goods  fi-om  Ireland  first 
permitted. 

1781. — Bank  of  England  charter  renewed,  on  making  further  advances  to  govern- 
ment of  £3,000,000.  East  India  Company's  charter  renewed.  Necker  published 
his  financial  statement  for  France,  1781,  and  retired  from  office.  1782. — National 
Bunk  of  Ireland  established.  1783. — Charter  granted  to  the  Bank  of  Ireland. 
1 784. — The  Bank  of  New-York  chartered,  9th  June.  Mail  coaches  first  established 
in  England.  Taxes  on  saddle  and  coach  horses  first  imposed,  and  tax  on  hats,  in 
England.  1785. — Opening  of  the  canal  between  the  Baltic  and  the  Northern 
Ocean.  1786. — British  treaty  of  commerce  with  France.  Bank  of  St.  Petersburg 
established.  1787. — "Pennsylvania  Society  for  the  encouragement  of  Manufac- 
tures and  the  Useful  Arts,"  formed.  Cotton  exported  by  West  India  Islands. 
1788. — Formation  of  the  African  Association.  1789. — Issue  of  assignats  in 
France,  17th  December.  Canal  between  the  Thames  and  Severn.  1790. — The 
first  life-boat  launched  in  England,  at  South  Shields.  Nails  first  made  by  ma- 
chinery. 

1791.— The  first  Bank  of  the  United  States  chartered;  capital,  $10,000,000. 
Vancouver's  voyage  of  discovery.  The  buckle-makers  of  Birmingham  petitioned 
Parliament  against  the  use  of  shoe-strings.  Numerous  riots  at  Birmingham. 
1793. — An  income  tax  proposed  in  England,  but  abandoned.  Commercial  embar- 
rassments in  England.  Five  pound  notes  first  issued  by  the  Bank  of  England. 
The  first  ambassador  from  Turkey  arrived  in  London,  December  20.  Whitney's 
cotton-gin  invented  and  first  used.  1794. — Treaty  of  commerce  between  England 
and  the  United  States.  1795. — Embargo  on  all  Dutch  ships  in  English  ports, 
26th  January.  Warren  Hastings  acquitted,  23d  April.  Forced  loan  of  600,000,000 
francs  in  France.  Mandates  substituted  for  assignats.  1796. — Note  and  bill  stamps 
increased  in  England.  Tax  imposed  on  bachelors.  Loyalty  loan  of  £18,000,000. 
1797. — Suspension  of  the  Bank  of  England,  26th  February.  Notes  of  £1  and  £2 
first  issued,  March  11.  A  Frugality  Bank  proposed  by  Jeremy  Bentuam.  1798. — 
Silver  tokens  issued  by  the  Bank  of  England,  1st  January.  1799. — Sugar  first  ex- 
tracted from  beet-root,  by  the  Prussian  chemist,  Achard.  1800. — General  distress 
and  riots  in  England,  caused  by  the  high  price  of  bread,  January.  Dispute  re- 
epecting  the  close  of  the  century.  Lalande  decided  that  31st  December,  1800,  is 
the  last  day  of  the  eighteenth  century.  Union  of  Great  Britain  and  Ireland,  2d 
July.  Bank  of  England  charter  renewed  until  1833.  Stock  Exchange,  Capel  Court, 
commenced.     Armed  neutrality  of  Northern  powers. 


132  History  of  the  Bank  of  England. 


CHAPTER    XIV. 

DfCREASX     OF     FOKGERT BONUS     ON     BANK     STOCK ADDITION     TO     THE     INCOME     OF    THB 

CLERKS TRUCE    OF    AMIENS CONTINUANCE    OF   TUE    RESTRICTION  OF  CASH  PAYMENTS 

FRAUD     OF     ROBERT     ASTLETT RENEWAL     OF     THE     WAR ISSUE    OF   DOLLARS BERLIN 

DKCREE3 FINANCE    COMMITTEE ITS    RESULT ABRAHAM    NEWLAND FORGERIES. 

The  circulation  of  ^1  notes  proved  conducive  to  a  melancholy  waste 
of  human  life.*  Considering  the  advances  made  in  the  mechanical  arts, 
they  ■were  rough  and  even  rude  in  their  execution.  Easily  imitated,  they 
were  also  easily  circulated  ;  and  from  1797  the  executions  for  forgery 
augmented  to  an  extent  which  bore  no  proportion  to  any  other  class  of 
crime.  During  six  years  prior  to  their  issue  there  was  but  one  capital 
conviction  ;  during  the  four  following  years  eighty-five  occurred.  This 
great  increase  produced  inquiry,  which  resulted  in  an  act  "  For  the  better 
prevention  of  the  forgery  of  the  notes  and  bills  of  exchange  of  persons 
carrying  on  the  business  of  bankers."  By  this,  some  stringent  penalties 
were  denounced  against  offenders ;  and  a  notice  to  the  following  effect 
was  published  in  September,  1801  :  "All  the  one  and  two  pound  notes 
issued  by  the  Bank  of  England,  on  and  after  the  1st  of  August,  will,  to 
prevent  forgeries,  be  printed  on  a  peculiar  and  purposely  constructed 
paper;  consequently,  those  dated  31st  July,  or  any  subsequent  day,  will 
be  impressed  upon  paper  manufacture,  with  waved  or  curved  lines." 

It  will  be  seen,  at  a  later  period,  that  this  endeavor  to  repress  crime 
fell  sadly  short  of  the  necessity,  owing  to  the  great  truth  which  now  be- 
gins to  possess  the  minds  of  our  legislature,  that  punishment  is  not  a 
sufficient  preventive  ;  but  that  to  teach  men  to  be  good  is  more  effectual 
than  to  punish  them  for  being  bad.  The  extinction  of  human  life  con- 
tinued. The  English  criminal  law's,  those  laws  which  were  said  to  be 
written  in  blood,  and  which  were  the  remains  of  the  old  feudal  spirit  that 
disregarded  the  life  of  the  serf,  at  first  found  supporters  among  the  class 
which  suffered  from  the  evil.     So  long  as  the  law  was  left  to  take  its 

*  This  is  largely  discussed  in  the  Edinburgh  Review,  of  1818,  which  says:  "The 
year  1798  opened  a  new  scene.  The  act  for  authorizing  the  Bank  of  England  to 
stop  payment,  passed  in  1797  ;  and  another  act  was  passed  in  the  same  year,  the 
necessary  consequence  of  the  former,  but  still  more  directly  applicable  to  our  pres- 
ent purpose,  to  enable  the  bank  to  issue  notes  under  the  value  of  five  pounds.  The 
number  of  those  who  suffered  death  for  the  forgery  of  bank  notes  in  1798,  and  the 
two  succeeding  years,  was  twice  or  thrice  as  great  as  that  of  all  who  had  suflFered 
for  the  same  offence  for  fifty  years  before  the  suspension.  From  a  return  of  "  niV 
in  the  eight  years  before  1797,  we  suddenly  pass  to  a  return  of  a  hundred  and  forty- 
six  capital  executions  for  this  offence,  in  the  eight  years  which  followed  that  un- 
fortunate year.  From  three  executions  in  the  fourteen  years  before  the  suspension, 
the  number  becomes  iwo  hundred  and  nine  in  the  fourteen  years  after  it.  In  the 
last  twenty-one  years  of  cash  payments  there  were  five  or  six  executions  for  forgery. 
In  the  twenty-one  which  we  have  passed,  under  the  destroying  power  of  compulsory 
paper,  three  hundred  and  thirteen  persons  have  suffered  death  for  counterfeiting 
bank  notes." — Edinburgh  Review,  1818,  p.  209. 


Bonus  to  the  Proprietary.  133 

course,  and  no  voice  was  heard,  save  that  of  the  victim,  the  justice  which 
hung  a  man  for  a  one  pound  note  was  unquestioned ;  while  those  who 
read  in  the  daily  press  of  the  punishment  of  the  offenders,  rejoiced  in  it 
as  an  evidence  of  increasing  civilization,  and  thanked  heaven,  as  they  sat 
down  to  their  well-stored  tables,  that  they  had  been  preserved  from  so 
great  a  crime.  Nor  was  it  for  a  long  period  after  that  of  which  we  write 
that  the  eyes  of  men  were  opened  alike  to  the  sinfulness  and  inutility  of 
capital  punishments.* 

A  second  bonus  was  made  in  1801  to  the  proprietors  of  bank  stock, 
■who  received  £5  per  cent,  upon  the  capital,  in  navy  five  per  cents.  To 
the  artisan  and  to  the  stipendiary  it  was  a  time  of  much  distress.  By 
the  latter  a  period  of  scarcity  is,  perhaps,  most  keenly  felt,  from  the 
necessity  of  supporting  an  appearance  in  keeping  with  his  position,  and 
from  the  dangerous  ease  with  which  he  can  procure  credit.  A  magazine 
of  this  year  says,  "of  all  the  modes  of  relief,  that  which  was  adopted  by 
the  bank  directors,  in  their  conduct  towards  their  servants,  is  entitled  to 
the  highest  praise,  and  furnishes  an  example  every  way  worthy  of  imita- 
tion. They  made  a  very  liberal  addition  to  the  salaries  of  their  numer- 
ous clerks  and  other  servants. 

In  the  year  1802,  a  peace,  which,  unhappily,  proved  only  temporary, 
known  by  the  name  of  the  "  Peace  of  Amiens,"  was  concluded.  The  war, 
which  had  deprived  England  of  the  blood  of  some  of  her  bravest  citizens, 
and  reduced  the  national  treasury  to  the  verge  of  bankruptcy,  was  sup- 
posed to  be  over.  The  empire  once  more  saw  a  prospect  of  the  enjoy- 
ment of  peace;  and  men,  tired  with  "war  and  rumors  of  war,"  sick  at 
heart  of  the  announcements  of  great  battles  won  and  lost,  and  more  than 
all,  dissatisfied  at  the  rapid  increase  of  taxes  which  accompanied  laurels 
by  land  and  supremacy  by  sea,  began  to  think  that  a  cessation  from  so 
costly  a  game  would  be  agreeable.  Though  gilded  by  many  victories  ; 
though  triumphant  in  Egypt ;  and  though  the  battle  of  the  Nile  had 
spread  a  rejoicing  throughout  the  land,  England  had  witnessed  too  many 
reverses  not  to  hail  any  thing  like  peace  with  gladness.    On  the  continent 

*  Frightful  contrasts  multiply  at  every  change  of  our  point  of  view.  Four  pro- 
secutions for  forgery  by  the  Bank  of  England  are  to  be  found  from  1*783  to  1797. 
In  the  equal  period  from  1797  to  1811,  the  number  is  four  hundred  and  sixty-nine. 
They  were  multiplied  more  than  a  hundred  fold.  Well  might  the  preamble  of  a 
statute,  passed  in  1801,  recite,  that  "  The  forgery  of  bank  notes  has  of  late  increased 
very  much  in  this  kingdom,"  but  the  preamble  does  not  confess  the  whole  truth. 
Even  at  that  time  it  was  not  an  offence  increased,  but  an  offence  created.  One  fa- 
tal measure  of  State  had,  even  then,  caused  more  blood  to  flow  for  forgery  in  three 
years  than  had  been  shed  in  England  for  that  offence  during  fifty  years  before. 
Perhaps  no  civilized  government  has,  by  one  act,  given  so  dreadful  a  wound  to  the 
morality  of  a  people.  The  visible  connection  between  the  issue  of  small  notes  and 
the  effusion  of  blood,  is  one  of  the  most  frightful  parts  of  this  case.  Before  1797,  the 
bank  could  issue  no  notes  under  £5.  In  1802,  the  average  number  of  notes  under 
that  value  was  about  three  millions  and  a  half.  In  the  former  period  there  were  no 
capital  executions  ;  in  the  latter,  one  hundred  and  sixteen  occurred  in  four  years. 
In  1817,  there  were  30,000  forged  notes  stopped  at  the  banl%f  £1  and  £2;  nine 
hundred  of  £5 ;  fifty  of  £10,  and  two  of  £20.  The  whole  crime  is  in  truth  imputa- 
ble to  the  small  notes.  The  forgery  of  the  larger  we  are  authorized,  by  the  experi- 
ence of  the  former  period,  entirely  to  ascribe  to  the  habits  of  criminality  which 
originated  in  the  temptation  of  small  notes. — Edinburgh  Review,  Vol.  xxxi.,  1818. 


134  History  of  the  Bank  of  England. 

Napoleon  had  been  every  where  successful ;  and  when  the  preliminaries 
were  ratified  on  10th  October,  1801,  the  most  enthusiastic  tokens  of 
delight  were  exhibited  throughout  England. 

By  the  act  of  November,  1797,  the  payment  of  cash  was  restricted  to 
within  six  months  after  the  conclusion  of  the  war.  It  became,  therefore, 
necessary  in  April,  1802,  to  increase  this  limit.  The  reasons  assigned  by 
Mr.  Addington,  in  the  House  of  Commons,  were,  "that  it  would  be 
inexpedient  to  increase  the  circulation  of  guineas,  as  the  exchange  was 
against  this  country,  and  for  several  months  guineas  had  been  purchased 
with  a  view  to  exportation.  For  three  or  four  years  the  credit  of  the 
bank  had  undergone  no  diminution.  Bank  notes  were  received  cheer- 
fully and  readily ;  and  when  the  bank  was  allowed  to  call  in  notes  of  £l 
and  £2  to  the  amount  of  £800,000,  only  £400,000  were  claimed  in 
specie.  The  motion  was  opposed  on  the  ground  that  the  very  mention 
of  it  was  a  word  of  terror,  and  that  since  the  restriction  in  1797,  the 
forgeries  of  bank  notes  had  increased  so  alarmingly  as  to  require  seventy 
additional  clerks  to  be  employed  merely  in  detecting  them ;  that  within 
that  very  year  no  less  than  thirty  or  forty  persons  had  been  executed  for 
the  crime.  To  this  it  was  replied,  that  in  Liverpool  bank  paper  was  pre- 
ferred to  cash  ;  that  the  credit  of  the  bank  had  increased,  and  that  no 
petitions  had  appeared  against  it."  The  motion  was  carried,  and  the 
bank  restricted  from  paying  cash  before  1st  March,  1803. 

The  first  instance  of  fraud,  in  the  present  century,  to  a  great  amount, 
was  perpetrated  by  one  of  the  confidential  servants  of  the  corporation. 
In  the  year  1803,  Mr.  Bish,  a  member  of  the  stock  exchange,  was  ap- 
plied to  by  Mr.  Robert  Astlett,  cashier  of  the  Bank  of  England,  to  dis- 
pose of  some  exchequer  bills.  When  they  were  delivered  into  Mr.  Bish's 
hands,  he  was  greatly  astonished  to  find  not  only  that  these  bills  had 
previously  been  in  bis  possession,  but  that  they  had  been  also  delivered 
to  the  bank.  Surprised  at  this,  he  immediately  opened  a  communication 
with  the  directors,  which  led  to  the  discovery  of  the  fraud,  and  the  ap- 
prehension of  Robert  Astlett.  By  the  evidence  produced  on  the  trial, 
it  appeared  that  the  prisoner  had  been  placed  in  charge  of  all  the  ex- 
chequer bills  brought  into  the  bank,  and  when  a  certain  number  were 
collected,  it  was  his  duty  to  arrange  them  in  bundles,  and  deliver  them 
to  the  directors,  in  the  parlor,  where  they  were  counted,  and  a  receipt 
given  to  the  cashier. 

This  practice  had  been  strictly  adhered  to ;  but  the  prisoner,  from  his 
acquaintance  with  business,  had  induced  the  directors  to  believe  that  he 
had  handed  them  bills  to  the  amount  of  £700,000,  when  they  were  only 
in  possession  of  £500,000.  So  completely  had  he  deceived  these  gentle- 
men, that  two  of  the  body  vouched  by  their  signatures  for  the  delivery  of 
the  larger  amount. 

He  was  tried  for  the  felonious  embezzlement  of  three  bills  of  exchequer, 
of  £1,000  each.  A  fatal  objection  was,  however,  raised  by  the  counsel 
of  Mr.  Astlett,  and  the  bank  failed  in  their  endeavor  legally  to  establish 
his  guilt.  Thou^the  prisoner  was  acquitted  in  this  instance,  he  was  de- 
tained in  custody,  until  the  directors  could  cause  a  civil  process  to  be 
issued  against  him.  From  this  plan  they  departed,  however;  and  on  the 
renewal  of  the  sessions  Astlett  was  again  tried  for  the  criminal  offence. 


Export  of  Bullion.  135 

The  indictment  charged  him  this  time  with  the  felonious  embezzlement 
of  property  and  eflfects  of  the  Bank  of  England.  He  was  found  guilty, 
with  the  reservation  of  some  points  of  law,  which  were  left  for  the  de- 
cision of  the  twelve  judges.  In  the  following  year  Mr.  Baron  Hotham 
said  the  objections  had  been  ably  and  legally  discussed,  and  that  the 
judges  were  of  opinion  that  "  the  prisoner,  having  been  found  guilty  of 
the  embezzlement,  was  subjected  to  the  pain  of  death." 

This  sentence,  however,  was  not  executed;  and  Mr.  Astlett  remained 
a  prisoner  in  Newgate  for  many  years. 

At  the  next  half-yearly  meeting  of  the  proprietors,  it  became  necessary 
for  the  governor  to  state  that  a  loss  had  been  sustained  through  Mr.  Ast- 
lett of  £320,000,  £78,000  of  which  the  directors  hoped  to  recover.  It 
was  announced  that  this  would  make  no  alteration  in  the  dividend, 
although  it  amounted  to  nearly  the  entire  interest  of  the  half-year.  The 
governor  then  said  that  the  directors  were  not  to  blame  for  the  malprac- 
tices of  Mr.  Astlett,  who  had  succeeded  in  making  away  with  the  effects 
of  the  bank  by  interlineations,  and  by  calling  out  false  sums,  when  the 
property  was  regulated.  A  very  satisfactory  explanation  was  given,  by 
which  it  appeared  that  the  directors  had  relied  on  Mr.  Astlett's  charac- 
ter and  long  fidelity.  Under  all  circumstances,  it  was  stated  that  it 
would  have  required  a  supernatural  power  to  have  at  first  detected  him. 

Although  the  governor  stated  that  the  defalcation  would  make  no  dif- 
ference in  the  dividend,  it  was  probably  preventive  of  a  bonus.  Upon 
the  capital  stock  of  the  company  the  fraud  would  have  amounted  to  two 
and  a  half  per  cent.,  and,  as  this  was  the  only  year  between  1798  and 
1807  (with  the  exception  of  that  when  the  charter  was  renewed)  which 
passed  without  the  declaration  of  a  bonus,  there  can  be  little  error  in  as- 
signing the  crime  of  the  cashier  as  a  cause  of  the  omission. 

In  February,  1803,  the  bank  restriction  bill  was  again  proposed  by  Mr. 
Addington.  The  uncertainty  of  the  peace  enjoyed  by  the  nation,  the 
knowledge  that  the  restless  spirit  of  the  first  French  consul  was  planning 
schemes  of  conquest,  and  an  extension  of  territory,  incompatible  with  the 
liberty  of  England,  was  undoubtedly  one  great  reason.  In  addition,  a 
three  years'  scarcity  had  compelled  us  to  seek  a  supply  of  grain  from  the 
continent ;  and  for  this  purpose  twenty  millions  of  bullion  had  been  sent 
out  of  the  country  within  that  period.  An  additional  large  drain  of  casb 
for  our  army  and  navy  also  appeared  to  render  a  return  to  specie  pay- 
ments almost  impossible,  as,  in  the  opinion  of  Mr.  Addington,  we  ought 
to  wait  the  operations  of  a  flourishing  commerce  to  bring  back  some  pro- 
portion of  this  vast  amount.  A  bill,  therefore,  limiting  the  suspension  of 
specie  payments  to  six  weeks  after  the  commencement  of  the  ensuing 
session,  was  passed.  The  wisdom  of  the  arrangement  was  soon  seen. 
The  stipulations  of  the  treaty  of  Amiens  had  never  been  fulfilled  by  Bona- 
parte. The  attempt  to  control  by  treaties  the  man  who  never  made 
one  but  with  the  view  of  violating  its  provisions,  proved  fallacious. 

During  the  short  period  which  the  truce  lasted,  antagonistic  feelings 
were  operating  in  England,  and  a  violation  of  justi^  was  witnessed  in 
the  transactions  of  the  first  consul  of  France,  which  obviously  tended  to 
destroy  the  existing  peace.     His  insidious  fomentation  of  the  quarrels  of 


136  History  of  the  Bank  of  England. 

the  Swiss,  and  his  insolent  assumption  of  the  character  of  arbiter;  his  in- 
terference with  St.  Domingo  ;  his  treacherous  conduct  to 

"  ToussAtNT,  the  most  unhappy  man  of  men  !" 

tended  to  nourish  the  dislike  with  which  Napoleon  was  universally  re- 
garded by  the  English.  The  feelings  of  the  rival  nations  were  soon 
kindled  into  rage.  Foul,  and  even  false  assertions,  were  made  on  both 
sides  of  the  channeh  The  press  of  London  and  Paris  attacked  and  re- 
criminated, and  the  ruler  of  France  lowered  the  personal  dignity  which 
he  usually  so  sternly  maintained,  by  prosecuting  a  royalist  emigrant  for 
an  offensive  libel.  But  that  which  marked  the  insecure  nature  of  the 
truce  of  Amiens  was  the  discovery  of  persons,  chiefly  military,  in  the  act 
of  performing  Bonaparte's  directions,  to  make  exact  plans  of  the  har- 
bors and  coasts  of  the  United  Kingdom.  The  indignation  of  England, 
hitherto  somewhat  suppressed,  burst  forth  like  a  torrent.  The  treachery 
of  France  was  openly  and  vehemently  denounced.  The  press  and  the 
Parliament  alike  spoke  the  voice  of  the  people.  The  government  openly 
announced  that  the  French  were  recruiting  their  armies,  and  increasing 
their  fleet,  and  that  it  was  necessary  for  England  to  adopt  the  same 
course.  At  length  the  storm  burst  forth  which  was  to  desolate  Europe. 
The  ambassador  was  recalled  from  Paris;  and  on  the  18th  May,  after  a 
short  and  uncertain  peace  of  fourteen  months,  war  was  again  declared. 

The  commencement  of  hostilities  rendered  a  return  to  cash  payments 
impracticable.  The  English  government  was  well  aware  that  tliis  coun- 
try would  be  called  upon,  by  whatever  allies  she  might  form,  for  pecu- 
niary support.  Her  great  commercial  prosperity,  the  vast  stake  she  had 
in  preserving  her  independence,  and  with  it  that  of  the  great  nations  of 
Europe,  rendered  England  the  most  important  enemy  of  France.*  But 
it  was  her  gold  which  chiefly  made  her  dangerous.  The  sinews  of  war 
possessed  by  her  caused  her  demonstrations  to  be  regarded  with  anxiety, 
enabling  her  to  treat  upon  independent  terms  with  the  enemy,  when  the 
remainder  of  Europe  crouched  obsequiously  before  him.  It  was  neces- 
sary, therefore,  to  reserve  her  specie  as  much  as  possible  to  meet  the 
expenses  of  the  contest;  and  in  1803  a  bill  was  introduced,  postponing 
cash  payments  until  six  months  after  a  definitive  treaty  of  peace.  "  Nor 
was  this  done,"  said  Lord  Hawkesbury,  "  either  at  the  request  or  sunf- 
gestion  of  the  bank  directors,  as  government  had  brought  it  forward 
solely  from  a  conviction  of  its  necessity."  In  the  debate  which  occur- 
red, the  chancellor  of  the  exchequer  remarked,  "that  it  was  very  much 
to  the  credit  of  the  bank  that  it  had  not  abused  the  discretion  given  it, 
with  a  view  to  its  own  private  profits." 

*  At  the  commencement  of  the  Reign  of  Terror  the  government  adopted  the  plan 
of  a  forced  loan  from  the  ojJulent  classes.  This  tax  was  imposed  on  an  ascending 
scale,  increasing  according  to  the  fortunes  of  the  individuals  ;  and  out  of  an  income 
of  50,000  francs,  or  about  £2,000  a  year,  they  took,  in  1792,  36,000  francs,  or  about 
£1,600.  This  immense  burden  was  calculated  as  likely  to  produce  at  once  a  mil- 
liard of  francs,  or  £40,000,000  sterling ;  and  as  a  security  for  this  advance,  the  per- 
sons taxed  received  assignats,  or  were  inscribed  as  public  creditors  on  the  grand 
livre  of  the  French  funds,  a  security,  in  either  ease,  depending  entirely  on  the  suc- 
cess of  the  revolution,  and  which  proved,  in  the  end,  almost  illusory. — Alison's 
Europe,  vol.  1,  p.  315. 


Profits  of  the  Proprietors.  137 

The  scarcity  of  silver  had  been  severely  felt  for  some  time  prior  to 
1804,  and  the  bank  issued  dollars  of  five  shillings.  "These  dollars," 
says  Mr.  Gildart,  "  had  on  the  obverse  side  an  impression  of  his  majesty's 
head,  and  the  following  superscription  :  'Georgius  III.,  Dei  Gratia  Rex,' 
and  on  the  reverse  side,  the  impression  of  Britannia,  and  the  following: 
'Five  shillings  dollar.  Bank  of  England,  1804.'"  In  the  same  year, 
a  bill  was  introduced  to  prevent  the  tokens  issued  by  the  bank  from  being 
counterfeited  ;  and  though,  in  the  course  of  the  debate,  the  directors 
were  accused  of  wishing  to  grasp  one  of  the  privileges  of  the  sovereign, 
the  bill  was  carried.     Of  these  coins,  1,419,484  Avere  issued. 

The  restriction  placed  upon  the  bank  by  government  was  naturally 
productive  of  increased  profits.  Although  the  chancellor  said,  "  that  to 
its  honor,  it  had  not  availed  itself  of  the  disposition  of  the  act,  to  issue  a 
quantity  of  paper  exceeding  its  amount  of  capital ;"  yet  the  absence  of 
treasure  in  its  bullion  ofBce  was  a  sufllicient  reason  for  the  bonus  which 
■was  annually  presented  to  its  proprietary,  and  Avhich  was  renewed  in 
1804,  1805  and  1806,  at  the  rate  of  five  per  cent,  in  cash  upon  the  capi- 
tal in  each  year;  and  in  1807  they  received  the  agreeable  announcement 
that  the  dividend  would  be  raised  from  seven  to  ten  per  cent.,  free  of 
income  tax;  at  which  rate  it  remained  until  1822.  At  the  declaration 
of  the  bonus,  in  1806,  a  proposal  was  made  by  one  of  the  court,  and 
carried  unanimously,  that  the  gratuity  to  the  directors  should  be  doubled. 
The  amount  of  income  received  by  these  gentlemen  for  their  devotion  to 
the  interests  of  the  proprietary,  has  always  been  regarded  by  them  of 
small  moment,  compared  with  the  importance  of  the  position,  and  the 
circumstance  is,  therefore,  only  noticeable  as  an  evidence  of  an  estima- 
tion of  their  services. 

In  1696  it  was  arranged  that  the  same  recompense  to  the  governor, 
deputy-governor  and  directors,  which  had  been  presented  them  by  an 
order  of  the  court  in  1695,  should  be  continued  annually.  In  accord- 
ance with  this,  £200  per  annum  had  hitherto  been  received  by  the  gov- 
ernor and  deputy-governor,  and  £150  by  each  of  the  directors;  but  by 
the  new  arrangement,  the  former  have  since  continued  to  receive  £400, 
and  the  latter  £300  per  annum. 

In  1806,  the  three  millions  which  the  bank  had  advanced  to  the  State 
in  payment  of  the  charter  of  1800  became  due.  In  the  ordinary  course 
of  events,  this  sum  should  have  been  returned,  or  an  increased  rate  of  in- 
terest allowed.  The  government,  however,  thought  differently,  and  pre- 
vailed upon  the  bank  to  renew  the  loan  at  three  per  cent.,  until  six 
months  after  the  ratification  of  peace.  An  additional  sum,  therefore,  of 
nearly  five  hundred  thousand  pounds,  may  be  added  to  the  price  paid  by 
the  company  for  the  renewal  of  its  charter. 

The  war  had  been  costly  to  the  government.  The  star  of  Napoleon 
was  yet  in  the  ascendant.  Threats  of  invasion  were  boldlv  uttered  by 
the  French.  Vast  efforts  were  made  in  England  to  meet'them.  Five 
hundred  men  of  war  traversed  the  seas,  ventured  into  the  enemy's  harbor, 
destroyed  his  navy,  and  crippled  his  fl(.tillas.  The  officers  of  the  bank 
formed  a  volunteer  corps.  On  every  hill-top  throughout  the  island,  bea- 
cons blazed  and  sentinels  watched.  The  spirit  of  the  citizen  soldiery 
was  awake,  and  Europe  saw  the  tradesman  leave  his  shop,  the  merchant 


138  History  of  the  Bank  of  England. 

Lis  counting-house,  and  the  clerk  his  desk,  to  attest  that  the  ancient 
spirit  of  England  still  survived  to  maintain  the  freedom  bequeathed  to  the 
land.  The  fine  coalition  organized  by  Mr.  Pitt  had  been  crushed.  The 
emperors  of  Russia  and  Germany  witnessed  their  armies  cut  to  pieces, 
and  their  hopes  defeated,  from  the  heights  of  Austerlitz,  and  England 
mourned  the  death  of  that  great  man  who  had  roused  the  States  of 
Europe  to  a  sight  of  their  national  degradation.  The  continuation  of  a 
loan  of  three  millions,  therefore,  at  an  interest  far  below  the  market 
value,  was  of  some  importance.  It  is,  perhaps,  to  the  same  causes,  to- 
gether with  others,  hereafter  to  be  mentioned,  that  the  Bank  of  England 
was  made  the  object  of  a  searching  inquiry  at  a  later  period.  The 
energy  with  which  the  ambition  of  Bonaparte  had  been  met  by  the 
government  of  Great  Britain,  the  knowledge  that  the  commerce  of  this 
country,  together  with  her  insular  position,  rendered  her  calm,  self-pos- 
sessed and  defiant,  while  the  remainder  of  Europe  either  courted  him  or 
was  crushed  by  him,  produced  from  the  conqueror  that  fiercest  of  feel- 
ings, an  impotent  longing  after  vengeance.  With  the  vain  hope  of  de- 
stroying our  supplies  of  corn  from  the  Baltic,  the  entrance  of  British 
ships  was  prohibited  into  any  of  the  ports  or  rivers  of  Prussia ;  and  in 
November,  1806,  from  the  captured  city  of  Berlin,  was  issued  a  decree, 
declaring  the  British  islands  in  a  state  of  blockade.  France  was  without 
a  navy  ;  the  maritime  power  of  England  was  pre-eminent ;  and  the  inso- 
lence, therefore,  of  such  a  proclamation  can  only  be  measured  by  its 
impotence. 

The  chivalrous  spirit  which  has  from  time  to  time  shone  from  the 
anarchy  of  war,  and  which,  in  our  own  days,  we  have  seen  exemplified  in 
the  noble  conduct  of  Meiiemet  Ali,  was  absent  in  Napoleon  Bona- 
parte. But  the  blow  aimed  by  him  in  his  Berlin  decrees  was  more  mis- 
chievous to  French  commerce  than  to  English  enterprise.  In  all  the 
seaports  of  France*  the  contraband  trade  was  at  a  premium.  In  vain, 
from  the  heart  of  conquered  nations,  did  he  launch  his  imperial  edicts. 
English  merchandise  was  requisite,  and  English  merchandise  was  borne 
in  triumph  through  the  custom-houses  of  F'rauce  to  the  homes  of  her 
people.  The  only  diflTerence  between  illegal  and  legal  traffic  being  that, 
in  the  former,  the  profit  was  made  by  the  contrabandist,  and  in  the  latter 

*  Cambon,  the  minister  of  finance,  soon  after  the  fall  of  Robespierre,  made  an  im- 
portant and  astonishing  revelation  of  the  length  to  which  the  emission  of  assignats 
had  been  carried  under  the  reign  of  terror.  The  national  expenses  had  exceeded 
three  hundred  millions  of  francs,  or  above  £12,000,000  a  month;  the  receipts  of  the 
treasury,  during  the  disorder  which  prevailed,  never  exceeded  a  fourth  part  of  that 
sum,  and  there  Avas  no  mode  of  supplying  the  deficiency  but  by  an  incessant  issue 
of  paper  money.  The  quantity  in  circulation  at  the  fall  of  Robespierre  amounted 
to  six  milliards  four  hundred  milUons,  about  £300,000,000  sterling,  while  the  na- 
tional domains  were  still  worth  twelve  milliards,  or  above  £520,000,000  sterUng. 
But  this  astonishing  issue  of  paper  could  not  continue  without  introducing  a  total 
confusion  of  property  of  every  sort.  All  the  persons  employed  by  government,  both 
in  the  civil  and  military  departments,  were  paid  in  the  paper  currency  at  par  ;  but 
as  it  rapidly  fell,  from  the  enormous  quantity  in  circulation,  to  a  tenth  part,  and 
soon  a  twentieth  of  its  real  value,  the  p.ay  received  was  merely  nominal,  and  those 
in  the  receipt  of  the  largest  apparent  incomes  were  in  want  of  the  common  necessa- 
ries of  life. — Alison's  Europe,  vol.  1,  p.  313. 


Report  of  the  Finance  Committee.  139 

by  government.     In  addition  to  this,  our  capitalists  sought  other  fields  ;  % 
and  the  energy  which,  to  some  extent,  was  depressed  in  one,  was  more 
determined  and  successful  in  its  attempts  after  another  market. 

In  1808,  a  committee  was  appointed  to  inquire  into  several  branches 
of  the  public  expenditure ;  the  accounts  of  the  Bank  of  England  were 
examined  with  the  view  of  decreasing  the  emoluments.  Since  1786, 
when  the  charge  upon  each  million  of  the  public  debt  had  been  reduced 
from  £562  10s.  to  £450,  no  change  had  occurred.  The  national  debt, 
which  then  was  £224,102,424,  and  for  the  management  of  which 
£100,846  were  paid,  amounted  in  January,  1807,  to  £550,441,314,  on 
which  £265,818  were  received  by  the  bank,  in  addition  to  the  original 
£4,000  and  £1,898  on  £4,000,000,  bought  from  the  South  Sea  Company. 

The  difficulty  of  the  finance  committee  was  great  in  procuring  some 
satisfactory  criterion  by  which  to  arrive  at  a  fair  conclusion.  The  South 
Sea  House,  which  received  £582  13s,  6d.  for  each  million,  was  the 
nearest ;  but  the  small  amount  of  stock  was  a  reason  for  so  large  a  sum 
being  paid.  The  charges  of  the  Bank  of  Ireland  had  been  fixed  by  the 
rate  which  was  paid  to  the  English  bank,  and  to  argue  from  that  would 
be, very  like  arguing  in  a  circle.  The  management  of  the  public  debt  in 
America  aftbrded  some  illustration  ;  but  there  was  one  material  difference 
in  the  banks  of  the  United  States  merely  undertaking  the  payments  of 
the  dividends,  while  the  transfers  were  managed  at  the  public  offices. 
For  this  cause,  and  from  the  limited  number  of  the  stockholders,  (at  that 
period  about  15,000,)  the  risk  and  expense  of  the  American  could  not 
be  brought  into  comparison  with  the  English  bank.  This  was  somewhat 
unfortunate ;  for  the  finance  committee  might  have  urged  the  fact  that 
the  American  bank  charged  nothing  for  their  trouble,  with  full  force 
upon  that  body,  on  the  profits  of  which  they  were  in  judgment. 

Under  these  circumstances,  they  had  recourse  to  the  corporation  itself 
for  information.^  "  Assuming  as  an  incontrovertible  proposition,"  says 
the  report,  "  that  in  proportion  as  the  business  becomes  enlarged,  a 
moderate  commission  on  a  large  business  produces  a  greater  proportion- 
ate profit  than  a  higher  rate  on  one  more  confined,  it  is  obvious  that  a 
charge  of  allowance  reasonable  upon  twenty  or  twenty-five  millions,  be- 
comes profnse  and  extravagant  upon  five  hundred  millions.  The  increase 
in  the  establishment  of  the  bank,  which  has  been  rendered  necessary  by 
the  augmentation  of  this  branch,  consists  principally  in  the  number  of 
the  clerks  ;  of  whom  the  whole  number  employed  in  the  public  business, 
exclusively  or  principally,  was,  in  1786,  243  ;  in  1796,  313  ;  and  in  1807, 
450  ;  whose  salaries,  it  is  presumed,  may  be  calculated  on  an  average,  at 
between  £120  and  £l70  for  each  clerk;  taking  them  at  £135,  which 
exceeds  the  average  of  those  employed  in  the  South  Sea  House,  the  sum 

is £60,750 

at  £150, 67,500 

170, 76,500 

either  of  which  two  last  sums  would  probably  be  sufficient  to  provide  a 
superannuated  fund. 

Incidental  expenses  and  sundries,  about, £15,000 

Additional  buildings  and  repairs, 10,000 

Law  expenses,  and  losses  by  frauds  and  forgeries, 10,000 


140  History  of  the  Bank  of  England. 

On  this  penurious  calculation,  the  committee  proceeded  to  state  that 
the  whole  increase  of  officers  who  transacted  the  business  was,  in  the 
previous  eleven  years,  137,  the  annual  expense  of  whom  might  vary  from 
£18,449  to  £23,290,  the  addition  to  the  other  permanent  charges  being, 
probably,  about  one-half  or  two-thirds  of  that  sum,  while  the  increased 
allowance  for  management  in  the  last  ten  years  was  more  than  £155,000." 
The  conclusion  at  which  the  committee  arrived,  was  recommendatory  of 
a  reduction  of  the  profits.  After  stating  that  the  bank,  "  over  and  above 
the  charges  of  management,  arc  accustomed  to  receive  allowances  from  the 
public  of  ^£805  15s.  lOd.  per  million,  for  receiving  contributions  for  loans, 
and  £1,000  for  contributions  to  the  lottery;  and  that  they  have  the 
benefit  of  holding  all  the  money  for  half-yearly  dividends,  besides  having 
the  cash  for  the  navy  and  army  service,"  they  concluded  by  stating  that 
*•  it  is  deserving  the  attention  of  Parliament,  whether  a  further  reduction 
of  expense  cannot  and  ought  not  to  be  made  upon  this  branch  of  public 
expenditure." 

The  reason  which  appeared  most  plausible  was,  the  large  amount  of 
deposits  committed  by  the  government  to  the  keeping  of  the  bank  to 
meet  the  expenses  of  the  war.  In  1800,  Mr.  Pitt  alluded  to  this  balance 
as  affording  some  right  to  an  interest  in  the  annual  profits  of  the  compa- 
ny. These  balances  were,  however,  entirely  optional.  It  suited  the  pur- 
pose of  the  State  to  choose  so  secure  a  depository  as  the  national  bank ; 
it  was  a  cause  of  expense  to  the  latter ;  and  the  claim  of  Mr.  Pitt  to  par- 
ticipate in  the  profits,  appears  about  as  reasonable  as  the  demand  of  any 
wealthy  individual  to  share  in  the  yearly  returns  won  by  the  sagacity  of 
his  banker,  because  he  has,  to  meet  his  own  views,  deposited  a  large  sum 
in  the  hands  of  the  latter.  The  real  origin  of  the  committee  was  the 
spirit  which  could  not  bear  to  see  the  bank  directors  give  bonus  after  bo- 
nus to  their  proprietors,  or  increase  their  dividend  from  seven  to  ten  per 
cent.,  without  longing  to  participate.  This  is  apparent  in  the  following 
extract:  "The  annual  and  temporary  bonus  of  £5  per  cent,  which  the 
bank  have  for  some  successive  years  added  to  their  accustomed  dividends 
of  seven  per  cent.,  and  the  recent  augmentations  of  their  regular  divi- 
dends to  ten  per  cent.,  exclusive  of  property  tax ;  the  rise,  also,  in  the 
market  price  of  their  stock,  which,  having  sold  in  1786*  from  £156  to 

*  Nine  years  of  peace,  up  to  1792-3,  had  enabled  Great  Britain  to  recover,  in 
a  great  degree,  the  losses  and  exhaustion  of  the  American  war.  If  she  had  lost  one 
empire  in  the  Western,  she  had  gained  another  in  the  Eastern  world ;  the  wealth 
of  India  began  to  pour  into  her  bosom,  and  a  little  island  in  the  west  of  Europe 
already  exercised  a  sway  over  realms  more  extensive  than  the  arms  of  Rome  had 
reduced  to  subjection.  A  vast  revenue,  amounting  to  £7,000,000,  was  already  de- 
rived from  her  Indian  possessions ;  and,  although  nearly  the  whole  of  this  great  sum 
was  absorbed  in  their  costly  establishment,  yet  her  rulers  already  looked  forward 
with  confident  hope  to  the  period,  now  very  likely  to  be  realized,  when  the  empire 
of  Hindostan,  instead  of  being,  as  heretofore,  a  burden,  should  be  a  source  of  reve- 
nue to  the  ruling  State,  and  the  wealth  of  India  really  become  that  mine  of  gold  to 
Britain  which  it  had  long  proved  to  numbers  of  her  children.  Her  national  debt, 
amounting  to  £244,000,000,  and  occasioning  an  annual  charge  of  £9,317,000,  was, 
indeed,  a  severe  burden  upon  the  industry  of  the  people,  and  the  taxes,  though  light 
in  comparison  of  what  have  been  imposed  in  later  times,  were  still  felt  as  oppress- 
ive; but,  nevertheless,  the  resources  of  the  State  had  augmented  to  an  extraordi- 
nary degree  during  the  repose  which  had  prevailed  since  the  conclusion  of  the  for- 


Report  of  the  Finance  Committee.  141 

£l72  per  cent.,  now  sells  at  £230,  are  strong  circumstances  in  confirma- 
tion of  the  large  increase  of  their  profits."  These  profits  the  government 
desired  to  grasp,  but  they  were  only  attainable  by  mulcting  the  establish- 
ment in  an  indirect  way. 

The  unclaimed  dividends  were  another  source  of  gain  recommended  by 
the  committee,  which  was  perfectly  justified  in  the  report,  that,  as  they 
amounted,  on  the  8th  of  July,  1806,  to  £986,573,  the  sum  of  £800,000 
might  be  honorably  claimed. 

It  has  long  been  the  custom  to  regard  the  bank  as  indebted  entirely 
to  the  State.  The  profit  on  the  management  of  the  national  debt  is 
pompously  announced.  The  gain  arising  from  the  paper  circulation  se- 
cured by  the  bank  charter  is  proclaimed  as  an  additional  revenue.  The 
interest  also  arising  from  the  government  balances  is  not  forgotten.  But 
let  it  be  remembered  that  there  are  other  and  strong  claims  for  the  bank. 
At  the  period  of  the  finance  committee,  its  capital,  of  more  than  eleven 
millions,  was  lent  at  the  low  interest  of  three  per  cent.,  and  on  this  an  an- 
nual payment  of  £230,000  was  derived  from  the  company  for  the  charter. 
Advances  were  also  made  to  the  extent  of  £2,750,000  on  the  annual 
land  and  malt  taxes,  at  four  per  cent.,  and  this  produced  a  profit  to  the 
country  ;  while  the  three  millions  advanced  for  six  years,  and  continued 
when  this  period  had  expired,  at  the  interest  of  three  per  cent.,  was 
another  mode  of  payment  for  the  patronage  of  government.  The  bank 
also  deducted  the  property  tax  from  the  public  dividends,  and  paid  it 
into  the  exchequer  without  charge,  by  which  means  delay  was  obviated, 
and  the  expense  of  collection  saved. 

The  only  point  of  the  report,  independently  of  the  unclaimed  dividends, 
which  bore  the  semblance  of  justice,  was  its  conclusion,  when,  after  point- 
ing out  in  what  place  the  establishment  was  most  vulnerable,  and  where 
it  might  be  most  easily  assailed,  it  stated,  "  The  accommodations  derived 
by  the  public  from  its  connection  with  the  bank,  have  been  carried  on 
some  years  to  a  very  large  amount ;  and  it  must  always  be  considered  as 
an  object  of  the  greatest  consequence  to  maintain  the  permanence  of  an 
establishment  of  such  opulence  and  credit,  which  has  contributed  so 
materially  to  extend  commercial  prosperity,  and  to  maintain  the  public 
faith  of  the  country.  Your  committee  cannot  conclude  their  report 
without  bearing  testimony  to  the  favorable  disposition  so  often  mani- 
fested on  the  part  of  the  bank  towards  the  public  service  ;  and  they  en- 
entertain  no  doubt  of  the  same  readiness  to  accede  to  any  equitable 
arrangement  that  may  be  proposed  under  the  present  circumstances." 

The  report  of  the  committee*  was  followed  by  an  application,  on  the 


mer  contest ;  commerce,  agriculture  and  manufactures  had  rapidly  increased ;  and 
the  trade  with  the  independent  States  of  North  America  had  been  found  to  exceed 
what  had  been  enjoyed  with  them  in  a  state  of  colonial  dependence. — Alison's  Eii- 
rope,  vol.  1,  p.  157. 

*  A  new  plan  of  finance  was  proposed  to  Parliament,  in  1807,  by  Lord  Henrt 
Petty,  (now  Marquis  of  Lansdowne,)  Chancellor  of  the  Exchequer,  and  adopted  in  the 
arrangement  of  the  loan  for  that  year. 

The  annual  expenditure  during  the  war  was  estimated  at  £32,000,000  beyond 
what  the  surplus  of  the  consolidated  fund  and  the  annual  taxes  could  supply.  The 
war  taxes  were  estimated  at  £21,000,000,  viz.,  property  tax,  £11,500,000,  and  other 
10 


142  History  of  the  Bank  of  England. 

part  of  Mr.  Spencer  Percival,  proposing  a  reduction  in  the  rates  of 
management,  a  further  advance  of  £500,000  of  the  unclaimed  dividends, 
and  a  loan  without  interest  of  three  millions,  until  six  months  after  the 
conclusion  of  the  war,  or  the  payment  of  £150,000  per  annum  for  the 
same  period,  urging,  however,  the  superior  benefit  to  be  derived  by  the 
public  from  the  former.  The  following  extract  from  a  letter,  the  last 
written  on  the  occasion  by  the  chancellor  of  the  exchequer,  embraces  the 
arrangement  as  it  was  concluded  : 

"  I  have  proposed,  first,  that  the  bank  shall  now  advance,  out  of  the 
unclaimed  dividends  in  their  hands,  the  sum  of  £500,000  for  the  use  of 
the  public,  in  addition  to  the  sum  already  advanced  out  of  that  fund, 
provided  that  the  amount  of  such  dividends  remaining  in  the  bank  shall 
not  be  reduced  below  £100,000. 

"  2c?.  That  for  the  management  of  the  public  debt,  the  bank  shall  hence- 
forth be  allowed  as  follows:  £840  per  million  per  annum  upon  the  debt, 
whenever  it  may  amount  to  £400,000,000,  and  not  exceed  £000,000,000  ; 
£300  per  million  per  annum  on  the  amount  of  any  debt  unredeemed 
above  £600,000,000.  The  said  £600,000,000  continuing  in  such  case  to 
be  managed  at  the  aforesaid  rate  of  £340.  £450  per  million  per  annum 
on  the  debt  when  it  may  exceed  £300,000,000,  and  not  amount  to 
£400,000,000. 

"  3f?.  That  the  bank  shall,  on  or  before  the  5th  of  April  next,  advance 
for  the  public  service  in  the  present  year,  three  millions,  by  way  of  loan, 
without  interest.     The  principal  to  be  secured  by  exchequer  bills." 

At  a  meeting  of  bank  proprietors,  in  January,  1808,  the  proposals  were 
read  by  the  governor,  and,  after  some  explanations,  unanimously  agreed 
to.  The  following  was  their  purport :  "  That  £500,000  should  be  with- 
drawn from  the  fund  appropriated  for  unclaimed  dividends,  for  the  use  of 
the  public.  That  an  alteration  should  take  place  in  the  rate  of  the  man- 
agement, which  would  be  a  saving  to  the  government  of  £70,000  per 
iinnum  ;  and  that  three  millions  sterling  should  be  advanced  to  the  State, 
without  interest,  the  payment  to  be  secured  by  exchequer  bills,  to  be 
made  payable  from  the  signing  of  a  definite  treaty  of  peace." 

These  resolutions,  after  some  debate,  were  agreed  to,  and  the  object  of 
the  finance  committee  gained.    The  interest  on  the  three  millions,  at  five 

articles,  £9,500,000.  The  annual  deficiency  to  be  supplied  by  loan  was,  therefore, 
£11,000,000,  which  were  proposed  to  be  raised  by  mortgaging  the  war  taxes  to  the 
extent  of  ten  per  cent,  on  the  sum  borrowed  ;  the  surplus  of  which  sum  mortgaged, 
after  paying  for  interest  and  management,  was  to  form  a  sinking  fund  for  the  redeem- 
ing the  debt,  and  thereby  disengaging  tlie  part  of  the  war  taxes  mortgaged  in  a 
certain  number  of  j'ears,  according  to  the  rate  of  interest  at  which  the  loan  was 
transacted.  Thus,  if  the  interest  and  management  was  five  per  cent.,  there  would 
remain  five  per  cent,  as  a  sinking  fimd,  and  this  would  pay  off  the  debt  in  fourteen 
years.  The  sums  proposed  to  be  borrowed  in  this  manner  were  £12, 000, 000  for  the 
first  three  years,  £14,000,000  for  the  fourth,  and  £16,000,000  for  each  of  the  suc- 
ceeding ten  years  ;  amounting  altogether  to  £210,000,000  ;  for  which,  at  the  rate  of 
ten  per  cent.,  the  whole  of  the  war  taxes  would  be  mortgaged.  But  the  debt  con- 
tracted the  first  year  being  now  paid  off  by  the  sinking  fund  appropriated  to  it,  the 
portion  of  the  war  taxes  mortgaged  for  it  would  be  set  free,  and  be  applicable  to 
the  loan  of  the  following  year.  And  another  portion  being  set  free  the  following 
and  each  succeeding  year,  these  loans  might  be  continued  on  this  system  without 
limitation  of  time. 


^ 


Curious  Forgery.  143 


per  cent.,  till  the  conclusion  of  the  war,  amounted  to  about  one  million 
sterling. 

The  name  of  Abraham  Newland,  that  name  by  which  the  notes  of 
the  bank  were  often  indicated,  is  familiar  to  most  readers.  In  1807  he 
retired  from  the  office  of  chief  cashier,  after  a  service  of  more  than  half 
a  century.  His  last  act  was  to  decline  the  pension  which  the  liberality 
of  the  directors  offered.  The  same  year  he  died  ;  and  as  a  specimen  of 
the  fortunes  which  were  occasionally  amassed  in  the  service  of  the  estab- 
lishment, it  may  be  mentioned  that  his  property  amounted  to  £200,000, 
besides  £1,000  a  year  landed  estates.  It  must  not  be  supposed  that  this 
was  saved  from  his  salary.  During  the  whole  of  Mr.  Nkwland's  career, 
the  loans,  which,  during  the  war,  were  made  almost  yearly,  and  occasion- 
ally oftener,  proved  very  prolific.  A  certain  amount  of  them  was  always 
reserved  for  the  cashier's  office,  (one  parliamentary  report  names 
£100,000,)  and  as  they  generally  came  out  at  premium,  the  profits  were 
great.  The  family  of  the  Goldsmiths,  then  the  leaders  of  the  stock  ex- 
change, contracted  for  many  of  these  loans,  and  to  each  of  them  he  left 
£500,  to  purchase  a  mourning  ring.  From  some  remarks  iu  the  papers 
it  may  be  gathered  that  the  large  funds  of  Mr.  Newland  were  occasion- 
ally lent  to  these  gentlemen,  to  assist  their  varied  speculations.  It  was 
also  the  subject  of  frequent  allusion  in  the  pamphlets  of  the  period ;  and 
as  those  who  know  the  least  are  frequently  the  most  confident,  there  was 
not  much  ceremony  used  iu  the  strictures  passed  upon  Mr.  Abraham 
Newland. 

The  odium  thrown  upon  the  bank  for  the  many  deaths  which  have 
taken  place  for  forgery,  must  necessarily  find  some  palliation  in  the 
subtlety  of  those  who  entered  into  the  dangerous  traffic.  It  was  in 
truth  a  trade.  The  notes  were  frequently  sold  at  so  much  in  the  pound, 
and,  as  in  the  instance  about  to  be  related,  they  were  often  sent  into  the 
foreign  market.  In  1808  Vincent  Alessi,  a  native  of  one  of  the  Italian 
States,  went  to  Birmingham,  to  choose  some  manufactures  likely  to  re- 
turn a  sufficient  profit  in  Spain.  Amongst  others  he  sought  a  brass 
founder,  who  showed  him  that  which  he  required,  and  then  drew  his  at- 
tention to  "  another  article,"  which  he  said  he  could  sell  cheaper  than 
any  other  person  in  the  trade.  Mr.  Alessi  declined  purchasing  this,  as 
it  proved  to  be  a  forged  bank  note ;  upon  which  he  was  shown  some  dol- 
lars, as  fitter  for  the  Spanish  market.  These  also  were  declined,  although 
it  is  not  much  to  the  credit  of  this  Italian  that  he  did  not  at  once  de- 
nounce the  dishonesty  of  the  Birmingham  brass  founder.  It  would 
seem,  however,  from  what  followed,  that  Mr.  Alessi  was  not  quite  un- 
prepared, as,  in  the  evening,  he  was  called  on  by  one  John  Nicholls  ; 
and  after  some  conversation  he  agreed  to  take  a  certain  quantity  of 
notes,  of  different  value,  which  were  to  be  paid  for  at  the  rate  of  six  shil- 
lings in  the  pound. 

Alessi  thought  this  a  very  profitable  business,  while  it  lasted,  as  he 
could  always  procure  as  many  as  he  liked,  by  writing  for  so  many  dozen 
candlesticks,  calling  them  Nos.  5,  2,  or  1,  according  to  the  amount  of  the 
note  required.  The  vigilance  of  the  English  police,  however,  was  too 
much  even  for  the  subtlety  of  an  Italian ;  he  was  taken  by  them,  and 


144  History  of  the  Bank  of  England. 

allowed  to  turn  king's  evidence,  it  being  thought  very  desirable  to  dis- 
cover the  manufactory  whence  the  notes  emanated. 

In  December  John  Niciiolls  received  a  letter  from  Alessi,  stating 
that  he  was  going  to  America;  that  he  wanted  to  see  Niciiolls  in  Lon- 
don ;  that  he  required  twenty  dozen  candlesticks,  No.  5 ;  twenty-four 
dozen  No.  1,  and  four  dozen  No.  2.  Mr.  NrciiOLLS,  unsuspicious  of  his 
correspondent's  captivity,  and  consequent  frailty,  came  forthwith  to  town, 
to  fulfil  so  important  an  order.  Here  an  interview  was  planned,  within 
hearing  of  the  police  officers.  Nicholls  came  with  the  forged  notes. 
Alessi  counted  up  the  whole  sum  he  was  to  pay,  at  six  shillings  in  the 
pound,  saying,  "  Well,  Mr.  Niciiolls,  you  will  take  all  my  money  from 
me."  "  Never  mind,  sir,"  was  the  reply,  "it  will  be  all  returned  in  the 
way  of  business."  Alessi  then  remarked  that  it  was  cold,  and  put  on 
his  hat.  This  was  the  signal  for  the  officers.  To  the  dealer's  surprise 
and  indignation  he  found  himself  entrapped,  with  the  counterfeit  notes 
in  his  possession,  to  the  precise  amount  in  number  and  value  that  had 
been  ordered  in  the  letter.  Thus  Mr.  Nicholls  found  his  business  sud- 
denly brought  to  a  close,  and  the  brisk  trade  in  imaginary  candlesticks 
finished,  to  the  infinite  welfare  of  the  public. 

In  1809,  also,  the  public  were  made  aware  that  a  traffic  in  one,  two 
and  five  pound  notes,  had  existed  for  some  time  to  a  most  alarming  ex- 
tent. The  Bank  of  England  had  long  known  of  these  forgeries,  and  had 
been  successful  in  detecting  many  of  the  delinquents.  A  traffic  so  large 
had  never  before  been  discovered.  It  was  positively  sworn  that  forged 
notes  might  be  bought  in  "  sufficient  quantities  to  load  a  jackass." 
Those  which  reached  the  bank  were  detected  at  a  glance.  The  signa- 
tures of  some  cashiers  who  had  long  been  dead  were  on  many,  while 
others  bore  only  Christian  names.  From  these  inconsistencies,  and  the 
bad  color  of  the  paper,  they  were  chiefly  circulated  in  parts  remote  from 
the  metropolis.  Not  the  less,  however,  was  it  the  duty  of  the  directors 
to  detect  the  culprits,  thirteen  of  Avhom  were  taken  in  one  day,  through 
a  clever  contrivance  of  the  officers;  and  notes  to  the  amount  of  £10,000 
seized  on  the  premises.  The  paper  had  been  retailed  by  poor  ignorant 
people,  few  of  whom  could  write  or  read,  at  from  five  to  ten  shillings  in 
the  pound.  Birmingham  was  the  fountain-head  whence  they  flowed,  and 
Wales  and  Scotland  the  parts  where  they  were  principally  passed.  The 
idea  was  prevalent  among  all,  that  if  the  forged  notes  were  not  actually 
found  in  their  possession  they  could  not  be  convicted ;  a  delusion  quick- 
ly dispelled,  to  the  cost  of  these  unhappy  men. 


Report  of  the  Bullion  Committee.  l-iS 


CHAPTER    XV. 

HIGH     PRICE     OP     BULLION BULLION     COMMITTEE THE    REPORT FINANCIAL    DIFFICULTIES 

LOAN    OF   EXCHEQUER    BILLS MR.    HORNER's    MOTION MISCHIEVOUS    EFFECT    OF   THE 

BULLION    REPORT ^MOTIONS    OF     MR.     VANSITTART     AND     LORD     STANHOPE LETTER     OF 

LORD     KING     TO    HIS     TENANTRY RISE     IN     THE     VALUE     OF     THE    DOLLAR STOCK    EX- 
CHANGE  FRAUD. 

By  the  regulations  of  the  mint,  the  price  of  standard  gold  was 
£3  iVs.  low.  per  ounce.  In  1809,  however,  it  rose  to  £4  9s.  and  £4  12s. 
in  the  market.  The  bank  paper  was  correspondingly  depreciated.  The 
enemies  of  the  corporation  proclaimed  that  this  arose  from  the  over- 
issue of  its  notes.  Some  attributed  it  to  the  war,  which  occasioned  n 
large  exportation  of  gold.  Others,  again,  thought  these  opinions  wrong, 
and  that  it  arose  from  something  else,  which  would  correct  itself;  only, 
as  Mr.  Henry  Thornton  remarked,  "  it  had  not  yet  done  so."  All 
agreed  that  it  would  be  advisable  to  inquire  into  its  origin,  and  Mr. 
Horner  moved  for  accounts  relative  to  the  circulation.  From  this  arose 
the  famous  bullion  committee.     The  following  is  a  portion  of  the  report : 

"  The  directors  of  the  Bank  of  England  have  exercised  the  new  and 
extraordinary  discretion  reposed  in  them  since  1797,  with  an  integrity 
and  regard  to  the  public  interest,  according  to  their  conceptions  of  it, 
and,  indeed,  a  degree  of  forbearance,  in  turning  it  less  to  the  profit  of 
the  bank,  than  it  would  easily  have  admitted  of,  that  merit  the  continu- 
ance of  that  confidence,  which  the  public  has  so  long  and  so  justly  felt, 
in  the  integrity  with  which  its  afiairs  are  directed,  as  well  as  in  the  un- 
shaken stability  and  ample  funds  of  that  great  establishment." 

The  result  of  the  deliberations  was  made  known  in  the  following 
words : 

"  That  there  is  at  present  an  excess  on  the  paper  circulation,  of  which 
the  most  unequivocal  symptom  is  the  high  price  of  bullion,  and  next  to 
that,  the  low  state  of  the  continental  exchanges;  that  this  excess  is  to  be 
ascribed  to  the  want  of  a  sufficient  control  in  the  issues*  of  the  Bank  of 
England,  and  originally  to  the  suspension  of  cash  payments,  which  re- 

*  It  is  certainly  true  that  a  paper  circulation,  issued  by  a  government,  and  increased 
according  to  its  wants,  has  often  been  found  in  other  countries,  and  undoubtedly  would 
be  found  in  this,  a  very  powerf^d  temporary  resource.  Such  a  mode  of  retaining  re- 
sources has,  however,  always  beeu  reprobated,  not  only  as  adapted  exclusively  to 
a  tyrannical  or  a  revolutionary  government,  from  the  unlimited  extent  to  which  it 
may  be  pushed,  but  as  extremely  oppressive  and  unequal  in  the  manner  of  its  ope- 
ration, and  as  giving  a  most  unfair  advantage  to  the  profuse  debtor  over  the  thrifty 
creditor.  Whatever  objections,  however,  may  be  made  to  it  on  these  grounds,  it 
is,  beyond  all  doubt,  a  system  of  taxation  (for  this  is  its  true  character)  calculated 
to  afford,  for  a  short  time,  very  powerful  and  effective  resources.     Let  them  read 


146  History  of  the  Bank  of  England. 

moved  the  natural  and  true  control."  "  Your  committee,  therefore,  re- 
port it  as  their  opinion,  that  the  circulating  medium  of  this  country 
ought  to  be  brought  back,  vith  as  much  speed  as  is  compatible  with  a 
wise  caution,  to  the  original  principle  of  cash  payments,  at  the  option  of 
the  holder  of  bank  paper.  Your  committee  have  understood  that  reme- 
dies or  palliatives  of  a  different  nature  have  been  prescribed,  such  as  a 
compulsory  limitation  of  bank  advances  and  discounts,  during  the  sus- 
pension, or  a  compulsory  limitation  of  the  bank  dividends,  by  carrying 
the  surplus  to  the  public  account.  But  such  schemes,  in  addition  to 
other  reasons,  would  be  objectionable,  as  a  most  improper  interference 
with  the  rights  of  commercial  property.  According  to  the  judgment  of 
your  committee,  no  sufficient  remedy  for  the  present,  or  security  for  the 
future,  can  be  pointed  out,  except  the  repeal  of  the  law  which  suspends 
the  cash  payments  of  the  Bank  of  England." 

"  In  effecting  so  important  a  change,  some  diflSculties  must  be  encoun- 
tered ;  and  there  are  some  contingent  dangers  to  the  bank,  against  which 
it  ought  most  strongly  to  be  guarded.  But  they  may  be  provided  for 
by  restoring  to  the  bank  the  charge  of  conducting  and  completing  the 
operation,  and  by  allowing  the  bank  an  ample  period  for  conducting  it. 
To  the  discretion,  experience  and  integrity  of  the  directors  of  the  bank, 
Parliament  may  safely  intrust  the  charge  of  efiecting  that  which  it  may 
determine  upon  as  necessary.  The  directors  of  that  great  institution, 
far  from  making  themselves  a  party  with  those  who  have  a  temporary 
interest  in  spreading  alarm,  will  take  a  much  larger  view  of  the  perma- 
nent interests  of  the  bank,  as  indisputably  blended  with  those  of  the 
public." 

The  committee  concluded  by  recommending  the  lapse  of  two  years 
previous  to  removing  the  restriction,  and  an  issue  of  notes  for  less  than 
£5,  for  a  short  time  after  the  return  to  cash  payments. 

The  state  of  commerce  in  Great  Britain  demanded  serious  attention  in 
1811.*  Considerable  distress  existed.  The  markets  in  South  America, 
the  Brazils,  and  other  parts,  had  been  opened  to  English  adventure. 
Great  hopes  were  entertained,  and  great  ventures  made.     Extensive  ex- 

the  whole  essay,  and  then  say  whether  it  is  not  clearly  Hume's  opinion  that  the 
most  certain  way  of  producing  that  povertj',  beggary  and  sloth  which  he  describes, 
is  a  profuse  issue  of  bank  paper,  an  intemperate  use  of  an  excessive  stimulus,  which, 
from  its  very  nature,  cannot  admit  of  being  continued. — Edinburgh  Review,  August, 
1811. 

*  The  House  of  Commons  had,  on  the  13th  of  May,  1811,  declared,  in  a  resolu- 
tion, that  the  promissory  notes  of  the  Bank  of  England  had  hitherto  been,  and  were, 
at  that  time,  held  in  public  estimation,  to  be  equivalent  to  the  legal  coin  of  the 
realm,  and  generally  accepted  as  such  in  all  pecuniary  transactions  to  which  such 
coin  was  legally  applicable ;  yet,  in  so  short  a  time  as  six  or  seven  weeks,  the  min- 
isters found  it  necessary  to  interfere  in  support  of  this  equivalency,  not  only  by  the 
most  indecent  clamor,  but  by  the  most  formidable  legal  obstacles ;  while,  at  the 
same  time,  the  measures  which  they  proposed  and  cai-ried,  avowedly  in  consequence 
of  the  decision  of  the  judges  in  the  case  of  De  Yoxge,  clearly  and  unequivocally 
evinced  that  the  fact  stated  in  the  resolution  alluded  to  had  been  occasioned  entirely 
by  the  laudable  unwillingness  of  British  sufjeets  to  violate  what  they  conceived  to 
be  the  law  ;  and  that  those  who  had  voted  for  it  were  conscious  that  as  soon  as  this 
fear  was  removed,  the  public  estimation  would  be  as  different  as  possible  from  that 
which  had  been  asserted. — Edinburgh  Review,  March,  1811. 


Extensive  Speculation.  147 

ports  took  place  to  those  countries  and  to  the  West  India  Islands,  which, 
not  meeting  with  a  ready  sale,  ruined  the  shippers,  and  prevented  them 
from  paying  the  manufacturers,  who  had  the  bills  returned  upon  them. 

No  sooner  is  a  new  sphere  of  operation  opened,  than  the  manufactur- 
ing interest  appears  to  lose  its  usual  keen  discrimination.  The  thought- 
ful energy  which  ordinarily  characterizes  it  degenerates  into  an  unwhole- 
some excitement,  and  a  spirit,  not  of  trade,  but  of  speculation,  ensues. 
It  was  thus  with  these  exportations.  In  a  few  weeks  more  goods  were 
sent  out  to  Buenos  Ayres  and  the  Brazils  than  had  been  consumed  there 
in  the  previous  twenty  years.  The  warehouses  were  filled  with  the  most 
valuable  produce.  On  the  arrival  of  fresh  cargoes,  there  was  no  space  to 
contain  them ;  and  while  the  brain  of  the  exporter  was  filled  with 
visions  of  eager  purchasers,  and  of  cent,  per  cent,  profits,  his  merchan- 
dise lay  exposed  to  the  winds  and  the  waves  on  the  beach,  with  every 
chance  of  depredation  and  of  damage.  Exquisite  services  of  china  and 
of  cut  glass  were  forwarded  to  those  who  had  been  accustomed  to  the 
primitive  horn,  or  to  the  yet  more  natural  cocoanut  shell ;  and  as  golden 
mines  formed  the  invariable  accompaniments  of  the  Brazils  in  the  fancy 
of  the  English  trader,  tools,  with  a  hammer  on  one  side  and  a  hatchet 
on  the  other,  were  sent  out,  under  the  idea,  says  Mr.  McCulloch,  from 
whom  this  information  is  collected,  "  that  the  inhabitants  had  nothing 
more  to  do  than  to  break  the  first  stone  that  they  met  with,  and  then  cut 
the  gold  and  diamonds  from  it." 

If  the  old  jest  of  sending  out  warming-pans  to  Jamaica  be  untrue,  it  is 
at  least  certain  that,  at  this  time,  the  people  of  that  warm  climate  were 
presumed  to  be  proficients  in  the  use  of  skates,  as  some  of  the  speculators 
sent  out  this  article  with  an  eagerness  that  could  only  be  surpassed  by 
their  ignorance.  The  effect  on  the  merchant  and  the  artisan  is  obvious. 
Some  manufactories  were  closed.  Half  the  operatives  were  dismissed 
from  others.  In  many  the  workmen  found  their  wages  reduced ;  and 
the  mischief  thus  fell  upon  the  class  which  were  least  able  to  support  it. 
The  merchants  who  had  exported  beyond  their  capital  were  gazetted. 
In  many  instances  it  was  known  that  they  would  pay  in  full;  but  in  the 
mean  time  master  and  man  were  alike  depressed.  The  prices  of  goods 
fell  40,  50  and  60  per  cent.  Want  of  confidence  was  also  keenly  felt. 
Some  of  the  Scotch  banks*  contracted  their  business,  contented  with  re- 
taining their  capital,  in  preference  to  running  any  risk  in  the  pursuit  of 
profit.  This,  although  only  a  few  acted  so,  added  to  the  misery  in  that 
country. 

*  That  great,  and  sudden,  and  therefore  perilous  fluctuations  have  taken  place  in 
the  currency  of  Scotland,  is  placed  beyond  all  question  bj^  the  returns  made  by  the 
three  principal  Scotch  banks  to  the  committee  of  the  House  of  Commons  in  1819. 
For  example,  the  British  Linen  Company  state  that,  assuming  the  number  1,000  to 
represent  the  amount  of  their  notes  in  circulation  on  the  5th  of  January,  1810,  they 
had  increased  to  1,410  on  the  1t\\  of  January,  1814,  and  had  again  fallen  to  927  on 
the  2d  of  January,  1818 ;  being  an  increase  of  upwards  of  forty  per  cent,  in  the 
course  of  the  first  four  years  of  that  period,  and  a  decline  of  thirty-five  per  cent,  in 
the  course  of  the  next  four  years.  This,  however,  is  not  the  greatest  fluctuation : 
for,  while  the  issues  on  the  2d  of  January,  1818.  are  represented!  by  the  number  927, 
they  had  increased  to  1,334  on  the  1st  of  January,  1819  ;  being  a  rise  of  no  less  than 
forty-two  per  cent,  in  the  course  of  a  single  year. — Edinburgh  Rcvieiv,  Feb.,  1826. 


148  History  of  the  Bank  of  England. 

A  meeting  of  the  merchants  of  London  was  convened,  wliicb,  after  en- 
tering into  a  specification  of  the  causes  of  the  distress,  concluded  by 
recommending  a  loan  of  exchequer  bills. 

The  attention  of  Parliament  was  drawn  to  the  subject.  An  advance  of 
six  millions  was  authorized  by  them  on  the  principles  which  had  guided 
the  loan  of  1793,  in  sums  of  not  less  than  four  thousand  pounds.  Few 
houses,  however,  could  give  the  requisite  security,  owing  to  the  decreased 
value  of  merchandise;  and  bankruptcies  were  numerous. 

On  the  6th  of  May,  1811,  Mr.  IIorner  brought  forward  his  resolutions 
founded  on  the  report  of  the  bullion  committee,  with  a  view  to  produce 
a  resumption  of  payments  in  specie.  The  speech  has  been  happily  eulo- 
gized by  Lord  Bhougham  as  a  finished  model  of  eloquence  applied  to 
such  a  subject.  Anxious  that  his  speech  should  not  appear  to  blame  the 
bank,  Mr.  Horner  gave  it  a  testimony  which,  from  a  mind  so  well  versed 
in  monetary  subjects,  is  worth  recording.  "  No  man  who  has  ever  at- 
tended to  the  distresses  which,  in  various  parts  of  our  history,  war  has 
produced,  can  doubt  for  a  moment  that  from  the  Bank  of  England,  not 
only  the  government,  but  the  commercial  credit  of  the  country,  has  re- 
ceived the  most  important  assistance.  It  is  to  that  assistance  alone,  so 
beneficially  rendered  on  so  many  trying  occasions,  that  in  the  prospect 
of  similar  exertions  and  efforts  on  the  continent  we  can  look  for  support. 
The  interests  of  the  Bank  of  England,  therefore,  form  a  great  and  inte- 
gral part  of  the  public  credit  of  the  State."  The  debate  occupied  several 
sittings.  The  opinions  which  were  propounded  were  as  various  as  opin- 
ions upon  the  currency  have  ever  been ;  and  the  resolutions  were  lost  by 
a  vast  majority. 

The  publication  of  the  bullion  report*  was  stated  to  have  produced 
mischievous  consequences.  Napoleon's  decrees,  which  had  been  lev- 
eled at  our  commerce,  and  had  forbidden  the  importation  of  any  English 
manufactures,  had  not  effected  the  anticipated  result.  The  enterprise  of 
Great  Britain  sought  other  ports ;  her  gold  still  subsidized  her  oppo- 
nents; her  energy  remained  uncrushed  ;  her  enduring  courage  proved,  on 
many  well-fought  fields,  that  she  was  as  fearless  now  as  when,  centuries 
before,  she  met  her  ancient  enemy  on  his  own  soil;  or,  at  a  later  period, 

*  On  the  whole,  therefore,  it  appears  to  us  that  the  restoration  of  cash  or  bullion 
payments  affords  the  only  effectual  security  against  depreciation,  and  against  sud- 
den and  pernicious  fluctuations  in  the  value  of  our  paper  money ;  and  the  way  in 
which  it  would  produce  these  effects  is  sufficiently  obvious.  For  the  run  that  would 
then  be  made  on  the  bank  for  specie  for  exportation,  whenever  the  currency,  as 
compared  •with  that  of  other  countries,  had  become  redundant,  would  very  quickly 
compel  the  directors  to  limit  their  issues,  and  consequently  to  raise  the  value  of 
their  paper.  An  extremely  small  profit  is  sufficient  to  set  the  bullion  merchants, 
and  a  still  smaller  one  to  set  the  melters  of  the  coin  to  work ;  and,  therefore,  the 
value  of  a  paper  currency,  convertible  at  pleasure  into  a  given  quantity  of  the  pre- 
cious metals,  can  never  differ  considerably  from  their  value  in  the  country  where  it 
is  issued ;  and  all  the  difference  that  can  take  place,  in  the  value  of  gold  and  silver 
currencies  among  nations  trading  together,  will  generally  be  limited  to  the  expense 
of  the  transfer  of  bullion  from  the  one  to  the  other.  If  it  exceeds  this  sum,  an  in- 
ducement to  importation  is  held  out ;  if  it  is  less,  it  will  be  profitable  to  export ;  and 
in  either  case,  the  equilibrium  of  value  will  be  very  soon  attained. — Edinburgh  Re- 
view, vol.  31,  p.  66. 


Speech  on  the  Currency.  149 

battled  with  him  beneath  the  shadow  of  the  pyramids.-  Despairing  of 
success,  and  finding  himself  more  injured  than  injuring,  the  ruler  of 
France  was  on  the  point  of  abandoning  his  anti-commercial  policy. 
Subsequently,  when  he  read  the  declaration  of  the  depreciation  of  our 
currency,  the  necessity  of  returning  to  specie  payments,  and  the  mis- 
chiefs inflicted  on  this  country  by  its  paper  not  being  convertible  into 
cash,  he  persevered  with  increased  energy. 

On  the  13th  of  May,  1811,  Mr.  Vansittart*  brought  forward  and 
carried  his  celebrated  resolutions,  to  the  effect,  that  the  price  of  gold  had 
advanced,  but  that  the  value  of  bank  notes  was  not  depreciated.  The 
debate  is  worthy  perusal,  from  its  occasionally  indecorous  scenes  and 
strange  language ;  nor  will  the  reader's  patience  be  much  tired  by  the 
following  specimen  of  a  speech,  made  upon  the  currency,  in  the  great  de- 
liberative assembly  of  the  national  council.  The  speaker  was  a  Mr.  Ful- 
ler, who  said,  "  I  don't  like  this  business  at  all.  I  think  it  is  a  humbug. 
There  is  no  depreciation,  or  I  know  nothing  about  the  matter.  I  can't 
understand  how  they  would  make  out  that  there  is  any  depreciation  of 
the  currency.  No,  sir,  this  is  all  the  attempt — this  is  all  the  system  of 
the  base  faction,  the  cowardly  faction,  who  are  undermining  the  credit  of 
the  country.     Yes,  sir,  the  faction  that  originates  every  thing  malevolent 

to ;  but,  sir,  I  go  to  other  things.     Some  gentlemen  say,  sir,  the 

guinea  was  once  worth  20s.  It  is  now  worth  21s. ;  and  some  say  it  is 
worth  24s.  Why,  then,  if  this  be  the  case,  why  not  say  so?  Why  not 
speak  out?  Why  not  raise  the  guinea  at  once  to  24s.  ?  I  don't  pretend 
to  puzzle  myself  with  these  things ;  but  I  say,  let  the  country  be  firm  ; 
let  the  country  keep  up  the  credit  of  its  currency,  and  all  will  go  well. 
There  are  various  reports  as  to  what  goes  with  the  gold ;  some  say  it  has 
disappeared  ;  and  some  say  it  has  been  hoarded  on  the  sea-coast,  in  order 
to  send  it  oft'  by  the  first  boats  that  come,  to  take  it  to  the  continent. 
No  matter  for  that.  What  should  hinder  us  from  having  a  circulation  of 
our  own,  that  nobody  can  take  from  us?  The  people  would  make  no 
objection  ;  they  would  take  any  thing  for  money  ;  they  would  take  tallow 
candles  for  change,  if  they  would  not  melt  in  their  pockets.  If  we  onco 
adopt  this  plan,  we  may  defy  the  enemy  as  long  as  we  like.  We  can 
make  coin  of  leather  or  oyster-shells;  and,  if  we  can  only  keep  up  its 
credit  for  a  year,  we  shall  have  Bonaparte  on  his  knees  at  the  end  of  it. 
He,  that  tyrant,  the  Emperor  of  France  himself,  will  be  in  despair  of  ruin- 
ing us.  I  wish  I  could  see  a  gentleman  here.  I  mean,  Mr.  Speaker,  I 
wish  I  could  see  a  gentleman  in  his  place  that  was  here  the  other  night, 
when  we  were  talking  about  playhouses.  A  great  man,  a  noble  person, 
sir;  I  would  have  given  him  a  hundred  playhouses.  Sir,  he  always  came 
forward  ;  he  always  spoke  when  there  was  a  mutiny — when  there  was  a 

*  The  plan  of  finance  proposed  in  the  year  1813  by  Mr.  Vaxsittaet,  and  adopted 
by  Parliament,  is  a  modification  of  Mr.  Pitt's  sinking  funds ;  and,  among  other  ob- 
jects, is  intended  to  rescind  the  alterations  which  have  been  made  in  these  funds,  as 
originally  established  in  1786  and  1792,  by  subsequent  acts  of  Parliament,  and  re- 
store them,  as  far  as  practicable,  to  the  state  in  which  they  would  have  stood  if  no 
such  alterations  had  taken  place.  It  will  be  proper,  therefore,  to  recapitulate  the 
original  enactments  and  alterations,  in  order  to  render  the  new  system  more  clear- 
ly intelligible. 


160  History  of  the  Bank  of  England. 

riot;  wherever,. in  short,  the  country  was  in  danger,  he  forsook  his  party 
and  spoke  his  mind.*  lie  would  have  put  down  this  mean,  conspiring 
set,  sir,  I  wish  to  set  my  face  against  the  whole  scheme.  It  grieves  me 
to  sec  the  time  of  the  house  taken  up  night  after  night.  It  grieves  me  to 
see  so  much  labor  and  sweating  about  this  bullion  report.  Why,  sir,  it 
won't  make  a  bit  better  appearance  in  the  papers  than  that  nonsensical 
dispute  between  you  and  ine."f 

Mr.  Fuller  was  probably  what  is  termed  a  "  thick  and  thin"  man. 
Sir  John  Sinclair  followed  in  a  speech,  which  tended  to  prove  the  ad- 
vantages of  a  paper  issue,  from  the  great  prosperity  at  home  and  suc- 
cess abroad  ;  intimating,  at  the  same  time,  an  idea  that  the  metallic 
frenzies  of  the  bullion  committee  might  bo  cooled  to  advantage  in  the 
Thames,  the  Tweed,  or  the  Shannon. 

This  year  was  remarkable  for  a  letter  of  Lord  King,J  addressed  to  his 
tenantry.  So  open  an  attack  upon  the  issues  of  the  bank  could  not  be 
passed  over  in  silence.  It  excited  great  censure  from  one  party  and 
praise  from  another,  and  occupied  the  attention  of  the  legislature  no  less 
than  that  of  the  people.     It  ran  as  follows  : 

"By  lease,  dated  1802,  you  have  agreed  to  pay  the  annual  rent  of 
-,  in  good  and  lawful  money  of  Great  Britain.     In  consequence  of 


the  late  depreciation  of  paper  money,  I  can  no  longer  accept  of  any  bank 
notes  at  their  nominal  value,  in  payment  for  satisfaction  of  an  old  con- 
tract. I  must,  therefore,  desire  you  to  provide  for  the  payment  of  your 
rent  in  the  legal  coin  of  the  realm  ;  at  the  same  time,  having  no  other 
object  than  to  receive  payment  of  the  real  intrinsic  value  of  the  sum 
stipulated  by  agreement,  and  being  desirous  to  avoid  giving  you  unneces- 
sary trouble,  I  shall  be  willing  to  receive  payment  in  either  of  the  man- 
ners following,  according  to  your  option. 

"  \st. — By  payment  in  guineas. 

"  2c?. — By  a  payment  in  Portugal  gold  coin,  equal  in  weight  to  the 
number  of  guineas  requisite  to  discharge  the  debt. 

"  3cZ. — By  a  payment  in  bank  notes  of  a  sum  sufficient  to  purchase,  at 
the  present  market  price,  the  weight  of  standard  gold  requisite  to  dis- 
charge the  rent.     The  alteration  of  the  value   of  paper  money  is  esti- 

*  Mr.  SnEEiDAX  was  the  individual  alluded  to. 

f  Mr.  Fuller  here  referred  to  a  recent  scene  of  indecorous  altercation,  in  which 
he,  being  heated  with  wine,  had  attempted  to  throw  a  chair  at  the  Speaker,  on 
which  account  he  was  committed  to  the  custody  of  the  sergeant-at-arms. 

\  The  Edinburgh  Review,  of  August,  1811,  (p.  463,)  says  upon  this  letter,  viz. : 
"  We  confess,  tliat  when  we  first  heard  of  the  notice  which  Lord  King's  requisition 
to  his  tenants  had  excited,  we  were  disposed  to  regret  that  the  event  had  happened, 
not  because  we  did  not  tliink  that  the  proceeding  was  perfectly  equitable  and 
honorable,  but  because  we  thought  that,  in  the  actual  state  of  the  knowledge  and 
temper  of  the  administration,  it  would  lead  immediately  to  the  making  of  bank- 
notes a  legal  tender."  The  reviewer  further  says  :  "And  j'et  it  is  because  an  in- 
dividual has  resorted  to  a  remedy  thus  left  open  by  the  legislature  for  the  most 
just  and  obvious  purpose,  and  because  it  has  been  determined  by  the  judges  that 
the  laws  of  England,  as  hitherto  constituted,  will  not  sanction  the  degradation  of 
the  legal  coin  of  the  realm,  to  whatever  value  in  exchange  a  banking  company  may 
choose  to  give  to  their  notes,  that  the  late  act  to  make  bank  notes  equivalent  to 
guineas  has  been  passed,  and  that  the  further  measure  is  threatened  of  making 
bank  notes  a  legal  tender." 


Lord  Stanhope's  Resolutions.  151 

mated  in  this  manner.  The  price  of  gold  in  1802,  the  year  of  your 
agreement,  was  £4  per  ounce  ;  the  present  market  price  is  £4  14s.,  aris- 
ing from  the  diminished  vahie  of  paper.  In  that  proportion,  an  addition 
of  £17  10s.  per  cent,  in  paper  money  will  be  required,  as  the  equivalent 
for  the  payment  of  rent  in  paper. 

"  King. 

"  N.  B. — A  power  of  re-entry  and  ejectment  is  reserved  by  deed,  in 
case  of  non-payment  of  rent  due.     No  draft  will  be  received." 

This  notice  was  too  important  and  significant  to  escape  animadversion. 
It  struck  at  the  very  root  of  the  declaration  that  bank  notes  retained 
their  original  value,  and  was,  therefore,  warmly  debated  in  the  upper 
house.  But  the  descendant  of  the  illustrious  Locke  was  not  a  man  to 
be  daunted  from  the  path  he  had  chosen.  lie  boldly  defended  his  cir- 
cular, asserted  the  depreciation  of  the  bank  note,  and  maintained  the 
superior  value  of  the  metal.  It  appears  by  the  following  extract  from 
the  "  Morning  Chronicle'''  of  1802,  however,  that  the  idea  of  his  lordship 
had  previously  occurred  to  others  : 

"  Thursday  being  the  general  licensing  day  for  victuallers,  in  the 
parish  of  St.  Martin's-in-the-fields,  the  publicans  received  previous  notice 
that  they  must  pay  the  usual  licenses  in  hard  cash,  as  no  Bank  of  Eng- 
land notes  would  be  taken." 

If  this  paragraph  may  be  relied  on,  the  claim  of  novelty  is  lost  to  Lord 
King.  The  difficulty  was,  however,  met  by  Lord  Stanhope  proposing 
a  resolution,  declaring  it  illegal  to  receive  or  give  more  than  21s.  for  a 
guinea,  or  less  than  20s.  for  a  one  pound  note. 

"  The  bank,"  said  the  earl,  "  is  one  of  the  bottom  planks  of  the  ship 
of  England,  and  woe  be  to  us  if  we  permit  it  to  be  bored  through." 
Lord  Holland  defended  Lord  King,  and  said  that  it  was  a  most  ju- 
dicious act,  as  he  was  only  doing  that  which  the  claims  of  himself  and 
his  family  demanded,  and  that  he  acted  according  to  the  law  of  the 
country.  Lord  Grenville  eulogized  the  character  of  Lord  King,  his 
public  spirit,  his  great  information,  the  remarkable  extent  of  his  ac- 
quaintance with  the  subject  discussed,  and  spoke  of  his  private  virtues 
and  his  general  benevolence  of  disposition.  Among  other  remarks.  Lord 
King  said  :  "  I  saw  no  course  left  but  to  give  up  my  property,  or  hold  it 
at  such  value  as  the  bank,  in  its  good  pleasure,  might  put  upon  it,  or  to 
avail  myself  of  the  means  which  the  law  yet  affords  me  for  its  pre- 
servation." 

When  produced  before  the  lower  house,  a  warm  discussion  was  cre- 
ated. Opinions,  varying  as  much  as  the  views  of  the  speakers,  were 
enunciated.  It  was  said  by  some  that  the  bank  note  had  not  depreciated 
at  all ;  it  was  asserted  by  others  that  it  had  decreased  immensely.  Some 
honorable  members  avowed  their  belief  that  if  the  bill  should  pass,  the 
glory  of  England  would  pass  with  it ;  while  others  expressed  their  con- 
viction that  it  was  the  only  chance  the  country  possessed  of  maintaining 
its  greatness.  Many  took  the  opportunity  of  prophesying  that  which 
time  has  proved  to  be  false  ;  while  others  contented  themselves  with  con- 
tradicting their  opponents,  and  uttering  oracular  sayings,  more  distin- 
guished for  vagueness  than  for  wisdom. 


152  History  of  the  Bank  of  England. 

The  resolution  was  materially  altered  by  the  ministers,  and  only  about 
five  lines  left  unchanged  of  his  lordship's  bill,  which,  however,  retained 
its  purport  and  original  intention. 

Lord  King,  on  the  third  reading,  asserted  that  the  law  would  create 
additional  mischief,  and  great  inconvenience  ;  that  landlords  would  now 
refuse  to  grant  leases ;  that  the  bill  could  not  effect  its  object,  or  retard 
the  depreciation  of  bank  notes.  Lord  Eldon  gave  his  powerful  sanction 
to  the  act,  and  declared  that  the  claim  of  Lord  King,  in  the  letter  of  the 
latter  to  his  tenantry,  was  oppressive  and  unjust,  and  that  the  bill  was 
necessary  to  prevent  such  grievous  wrong.  The  following  forms  part  of 
his  speech  :  "  The  restriction  act  of  1797  interfered  so  far  with  individual 
contracts,  as  to  say  that  a  debtor  should  not  be  arrested  if  he  tendered 
his  debt  in  bank  notes  ;*  the  justice  of  that  enactment  has  never  been 
disputed,  and  is  it  now  to  be  said,  that  a  tenant  shall  have  his  goods  or 
stock  seized  because  he  cannot  pay  in  gold,  which  is  not  to  be  procured? 
Let  us  suppose  a  young  professional  man,  struggling  with  the  world,  who 
has  a  rent  to  pay  of  £90  per  annum,  and  who  has  £3,000  in  the  bank,  in 
the  three  per  cents.  His  lordship  demands  his  rent  in  gold,  but  the 
bank  refuses  to  pay  the  tenant  his  dividend  in  gold.  Would  not  the 
tenant  have  a  right  to  say,  '  as  a  public  creditor  1  am  refused  any  other 
payment  than  in  bank  notes  ;  but  here  is  a  legislator — one  of  those  by 
whose  act  of  Parliament  I  am  thus  refused  to  be  paid  except  in  bank 
notes — insisting  upon  my  paying  him  his  rent  in  gold,  which  I  cannot 
procure  ;  and  because  I  cannot  procure  it,  my  goods  are  to  be  distrained  ?' 
Would  not  this  be  a  grievous  oppression  ?  Surely  so  long  as  it  should 
be  expedient  to  continue  the  cash  suspension  act  of  1797,  this  present 
bill  must  become  a  part  of  it ;  for  otherwise  there  would  be  no  equality 
in  the  situation  of  different  contracting  parties,  nor  would  equal  justice 
be  dealt  out  to  those  who  had  an  equal  claim  to  it ;  as  there  could  be  no 
justice  in  leaving  the  tenant,  who  had  tendered  bank  notes,  exposed  to  be 
distrained  upon  by  his  landlord,  whilst  the  debtor  in  other  cases,  who 
had  tendered  bank  notes,  was  exempt  from  arrest.  I  am  peculiarly  situ- 
ated with  respect  to  this  question,  having  the  official  care  of  twenty-five 
millions  of  the  property  of  his  majesty's  subjects,  and  without  the  means 


*  The  Edinburgli  reviewer  says  of  this  questionable  policy  : 

"  All  the  other  processes  for  recovering  a  debt  in  the  legal  coin  of  the  realm  were 
left  open ;  whicli  was,  in  our  opinion,  clearly  and  distinctly  to  point  out  the  precise 
remedies  which  the  legislature  intended  should  be  taken,  if  at  any  time  the  currency 
really  became  depreciated,  and  the  debtor  proposed  to  pay  his  creditor  in  a  medium 
decidedly  of  less  value  than  that  in  tvhich  he  had  contracted  to  pay  him." 

This  depreciation  of  the  Bank  of  England  issues  was  attributed  to  the  suddenly 
increased  circulation.     The  reviewer  says:  (p.  452,  May,  1811 :) 

"  And  lastly,  the  paper  issues  of  the  Bank  of  England  have,  during  the  short 
6pace  of  the  last  three  years,  received  an  addition  of  more  than  one-thiri»  of  this 
amount  in  1808  ;  while  for  the  whole  course  of  six  years  before,  that  is,  from  1802 
till  the  latter  end  of  1808,  the  average  amount  had  been  nearly  stationary." 

This  increase  was  accompanied  by  an  increase  of  dividend  from  seven  per  cent, 
per  annum  (1788  to  1806)  to  tex  per  cent,  from  1807  to  1821. 

The  bank  stock  which,  in  1797,  1798,  was  quoted  at  1 15  to  145,  suddenly  increased 
in  1806  to  223  ;  in  1807,  to  2.35  ;  and  in  1809,  (pending  the  enlarged  volume  of  the 
circulation,)  to  288  per  cent.,  or  188  per  cent,  advance  on  the  par  value. 


Traffic  in  Bullion.  153 

of  enforcing   the  payment  of  any  part  of  that   sum    except  in  bank 
notes." 

The  bill,  which  was  limited  to  the  25th  of  March,  1814,  passed,  and 
enacts  "  that  the  taking  of  gold  coin  at  more  than  its  value,  or  bank  notes 
at  less,  shall  be  deemed  a  misdemeanor." 

A  protest  was  entered,  "  as  manifestly  tending  to  the  compulsory  cir- 
culation of  a  paper  currency  ;  a  measure  necessarily  productive  of  the 
most  fatal  calamities."  Lord  Holland  added,  that  "  he  made  it  also, 
because,  in  his  judgment,  the  repeal  of  the  cash  suspension  act  was  the 
only  means  which  could  cure  the  yet  greater  calamities  which  were  im- 
pending, from  the  present  state  of  the  circulation  of  the  country." 

At  one  period  in  1811*  the  market  price  of  gold  touched  £5  lis.,  and 
the  banlc  note  sunk  to  14s.  A  regular  traffic  was  maintained  ;  guineas 
were  bought  at  a  premium,  and  bank  notes  sold  at  a  discount.  In  spite 
of  Lord  Stanhope's  act,  the  traffic  continued.  While  the  mint  coined, 
there  were  always  exporters  ready  to  take  advantage  of  the  exchanges; 
it  was,  indeed,  according  to  one  of  the  members,  only  a  contest  which 
would  tire  first.  "  The  havoc  which  the  depreciation  had  made  with  all 
the  dealings  of  men,"  says  Lord  Brougham,  "  was  incalculable.  Those 
who  had  lent  money  when  the  currency  was  at  par,  received  the  depreci- 
ated payment,  and  lost  thirty  or  forty  per  cent.  Those  who  had  granted 
leases  received  only  two-thirds  of  tlieir  interest,  and  were  liable  to  be 
paid  off  with  two-thirds  of  their  capital."  The  following  will  give  some 
idea  of  the  necessity  of  the  restrictions  which  had  been  so  often  placed 
on  specie  payment.  "  Bonaparte,"  says  "  Knight's  History  of  England," 
"  never  took  the  field  without  carrying  an  immense  military  chest  with 
him,  and  this  chest,  from  obvious  motives  of  convenience,  was  always 
filled  and  replenished  with  gold.  On  starting  on  a  campaign,  the  French 
officers,  and  even  those  of  the  soldiers  who  had  money,  were  all  eager  to 
convert  it  into  gold,  some  of  which  was  carried  with  them,  and  some  se- 
creted at  home.  In  France,  all  cautious  persons  accumulated  all  the  gold 
specie  they  could,  to  conceal  and  keep  it  for  the  evil  hour.  Nearly  all 
over  the  continent  the  insecurity  of  property,  and  the  dread  of  forced 
contributions,  and  of  less  regular  plunder,  had  induced  the  habit  of  hoard- 
ing and  hiding  ;  and  gold  was  bought  up  and  sought  for  at  a  constantly 
increasing  price,  to  be  buried  in  the  earth  or  concealed  in  secret  recesses. 


*  "With  the  exception  of  the  misery  occasioned  by  the  destruction  of  the  assignats 
in  France,  we  do  not  think  that  the  misery  and  subversion  of  private  fortunes,  occa- 
sioned by  the  late  sudden  reduction  of  bank  paper  in  this  country,  has  ever  been 
paralleled.  Nor  was  this  misery  of  a  temporary  or  evanescent  character.  Its  per- 
nicious effects  will  long  continue  to  be  felt,  not  only  by  individuals,  but  by  the  nation 
at  large.  During  the  period  in  which  the  depreciation  was  greatest,  the  State  bor- 
rowed several  hundred  millions.  And  it  will  now  have  this  money,  which  was  bor- 
rowed when  a  bank  note  was  not  worth  more  than  14s.  or  15s.,  to  pay,  when  its 
value  is  at  par.  All  those  taxes,  too,  which  were  imposed  when  the  currency  was 
thus  reduced,  must  now,  though  not  nominally,  be  really  increased.  And  it  may 
be  questioned,  whether,  making  allowance  for  the  difference  in  the  value  of  money, 
the  country  was  not  less  heavily  burdened  in  1812  and  1813,  than  it  is  at  this  mo- 
ment, notwithstanding  we  have  now  got  rid  of  the  income  tax  and  war  malt  duty. — 
Edinburgh  Review,  1818. 


154  History  of  the  Bank  of  England. 

In  this  matter,  as  in  others,  Europe  was  returning  to  her  ancient  barba- 
rism, or  to  the  condition  of  the  despotic  nations  of  the  earth,  where  so 
large  a  proportion  of  the  precious  metals  is  constantly  withdrawn  from 
circulation  and  kept  hidden.  In  1812  and  1813,*  as  much  as  six  Span- 
ish dollars  could  be  obtained  in  any  part  of  the  Mediterranean  for  an 
English  guinea.  With  such  a  temptation  to  send  gold  abroad,  it  was  not 
likely  that  English  traders  and  speculators  should  be  prevented  from 
sending  gold  to  the  best  market.  Even  in  England,  Scotland  and  Ireland, 
the  practice  of  hoarding  specie,  during  the  whole  of  this  revolutionary 
war,  was  far  from  being  uncommon.  Again,  every  English  officer,  travel- 
ler, or  merchant,  that  went  abroad,  endeavored  to  carry  with  him  some 
gold,  as  a  corps  dc  reserve,  in  case  of  capture  by  the  enemy,  or  of  other 
accident.  Through  all  these  causes  united,  a  guinea,  half  a  guinea,  or 
seven  shilling  piece  had  become  a  rare  sight  in  Great  Britain." 

A  rise  of  ten  per  cent,  in  the  current  value  of  the  stamped  dollar  took 
place  in  the  same  year.  In  consequence  of  the  advance  in  the  price  of 
gold,  the  dollars  circulated  by  the  bank  sold  for  more,  as  bullion,  than 
their  rate  as  coin.  To  remedy  this  evil,  a  notice  was  published  by  the 
directors  that  they  would  receive  all  bank  dollar  tokens  at  the  rate  of 
6s.  Gd.  each,  instead  of  5s.  The  same  notice  advertised  that,  for  the 
future,  they  would  be  issued  from  the  bank  at  the  increased  price. 
Some  of  the  members  of  the  Ilouse  of  Commons  animadverted  strongly 
upon  this  announcement ;  but  they  were  silenced  by  the  reply  of  Mr. 
Manning,  one  of  the  directors,  "  that  the  arrangement  would  cost  the 
bank  fifty  thousand  pounds,  and  put  as  much  into  the  pockets  of  the 
public."  In  the  latter  part  of  the  year,  in  consequence  of  great  incon- 
venience experienced  from  the  absence  of  small  change,  the  bank  issued 
large  quantities  of  silver  tokens  at  5s.  6d.,  3s.  and  Is.  6d, 

The  extensive  circulation  of  these  tokens  rendered  some  protection 
from  counterfeits  necessary.  A  bill  was,  therefore,  passed  to  this  effect, 
and  Lord  Stanhope's  act  of  the  previous  year  was  continued  until  three 
months  after  the  opening  of  the  next  session.  A  clause  was  proposed  by 
Lord  Archibald  Hamilton  for  confining  the  dividend  of  profits  to  pro- 
prietors of  the  bank  to  £10  per  cent,,  in  order  to  give  them  an  interest 
in  the  recommencement  of  specie  payment.  This  was  negatived ;  and 
Mr.  Spencer  Percival  carried  an  amendment  in  its  place,  by  which  the 
landlord  was  deprived  of  the  right  of  ejectment  after  a  tender  of  bank 


*  But  it  would  be  worse  than  idle  to  set  about  proving  by  argument  a  fact  so 
notorious  as  the  prodigious  diminution  of  bank  paper  in  1814  and  1815.  In  this 
period  above  two  hundred  and  forty  country  banks  became  altogether  bankrupt,  or 
at  least  stopped  payment.  The  Board  of  Agriculture  estimated,  that  in  the  county 
of  Lincoln  alone,  above  three  millions  of  bank  paper  had  been  -nithdrawn  from  cir- 
culation ;  and  the  total  diminution  of  the  currency  during  1814,  1815  and  1816,  has 
never  been  estimated  at  less  than  twenty  millions,  though  it  probably  amounted  to 
much  more.  Mr.  Horner,  the  accuracy  and  extent  of  ■whose  information  cannot  be 
called  into  question,  made  this  statement  on  the  subject,  in  his  plan  in  Parliament : 

The  diminution  of  the  issues  of  paper  is  the  grand  point  to  be  accomplished  ;  and 
from  whatever  quarter  it  may  come,  or  from  whatever  point  it  may  be  prompted, 
we  shall  hail  it  with  joy  and  gladness,  as  the  Only  specific  for  the  present  disordered 
etate  of  the  currency. — Ed.  Rev.,  Dec,  1818. 


StocJc  Exchange  Fraud,  156 

notes  from  the  tenant,  and,  in  1814,  the  bill  of  Lord  Stanhope  was  pro- 
tracted during  the  bank  restriction  act. 

The  frequent  motions  made  by  Mr.  Pascoe  Grenfell  relative  to  the 
Bank  of  England,  some  to  limit  the  profits,  and  others  to  procure  ac- 
counts and  documents  from  the  corporation,  must  be  familiar  to  the 
readers  of  parliamentary  history.  Though  the  motions  were  almost  in- 
variably negatived,  and  the  good  or  evil  tendency  of  a  regular  publica- 
tion of  the  affairs  of  the  establishment  is  a  disputed  question,  there 
can  be  little  doubt,  from  the  decided  ability  with  which  they  were 
conducted,  that  they  tended  greatly  to  prepare  the  public  mind  for 
the  system  which  prevails  at  present.  Among  other  things,  he  con- 
tended that  the  bank  did  not  pay  sufficient  stamp  duty,  and,  in  1815, 
the  chancellor  of  the  exchequer  announced  that  he  had  negotiated 
with  the  bank  on  the  subject  of  a  composition  for  stamps  on  their  notes, 
the  result  of  which  would  be  communicated.  The  arrangement  formed 
was  on  the  average  of  the  circulation  during  the  preceding  year — the 
principle  being  that  the  bank  should  pay  £3,500  for  every  million  ster- 
ling issued  of  their  paper. 

On  the  21st  of  February,  1814,  the  Bank  of  England  and  its  neighbor- 
hood wore  an  appearance  of  great  excitement.  The  military  operations 
of  Bonaparte,  by  which  he  checked  the  great  allied  powers,  had  de- 
pressed the  funds.  Deep  anxiety  for  the  result  was  felt  throughout  Eng- 
land. On  that  day,  however,  although  Avhat  is  termed  "  a  private  day,'' 
the  clerks  in  all  the  stock  offices  of  the  establishment  were  busily  em- 
ployed in  preparing  transfers,  which,  contrary  to  the  custom  on  such  a 
day,  poured  in  from  the  members  of  the  stock  exchange.  Reports  and 
rumors  spread  rapidly.  Many  of  the  transfers  remained  unfinished,  as  a 
plot,  intended  to  deceive  all  London,  was  discovered  in  time  to  prevent 
their  execution.  The  following  is  a  brief  narration  of  this  important 
conspiracy. 

On  the  21st  of  February,  1814,  about  one  o^clock  in  the  morning,  a 
violent  knocking  was  heard  at  the  door  of  the  Ship  Inn,  at  Dover.  On 
being  opened,  the  intruder  announced  himself  as  Lieutenant-Colonel 
Du  BouRG,  aide-de-camp  of  Lord  Cathcart.  His  dress  supported  the 
assertion.  The  richly-embroidered  scarlet  uniform,  the  star  on  the 
breast,  the  silver  medal  suspended  from  his  neck,  the  dark  fur  cap,  with 
its  broad  band  of  gold  lace,  gave  the  wearer  a  military  appearance.  Ilis 
clothes  appeared  wet  with  the  sea  spray,  and  he  stated  that  he  had  been 
brought  over  by  a  French  vessel,  the  seamen  of  which  were  afraid  of 
landing  at  Dover,  and  had  placed  him  in  a  boat  about  two  miles  from  the 
shore.  His  news  Avas  important.  Bonaparte  had  been  slain  in  battle. 
The  allied  armies  were  in  Paris.  A  great  victory  had  been  gained,  and 
peace  was  certain.  He  immediately  ordered  a  post-chaise  and  four 
horses  to  be  prepared,  inquired  the  residence  of  Admiral  Foley,  and, 
with  the  appearance  of  great  haste  and  excitement,  wrote  the  following 
letter : 

"  To  the  Right  Hon.  T.  Foley,  Port  Admiral,  Deal  : 

"  Sir, — I  have  the  honor  to  acquaint  you  that  Z^Aigle,  from  Calais, 
Pierre  Duquin,  master,  has  this  moment  landed  me  near  Dover,  to  pro- 


156  History  of  the  Bank  of  England. 

cccd  to  the  capital  with  dispatches  of  the  happiest  nature.  I  have 
pledged  my  honor  that  no  harm  shall  come  to  the  crew  of  V Aigle. 
Even  with  a  flag  of  truce,  they  immediately  stood  for  sea.  Should  they 
be  taken,  I  entreat  you  immediately  to  liberate  them.  My  anxiety  will 
not  allow  me  to  say  more  for  your  gratification  than  that  the  allies  ob- 
tained a  final  victory  ;  that  Bonaparte  was  overtaken  by  a  party  of 
Sacuen's  Cossacks,  who  immediately  slaid  him,  and  divided  his  body 
between  them.  General  1'latoff  saved  Paris  from  being  reduced  to 
ashes.  The  allied  sovereigns  are  there,  and  the  white  cockade  is  uni- 
versal. An  immediate  peace  is  certain.  In  the  utmost  haste  I  entreat 
your  consideration,  &c.     Signed, 

"M.  Du  BouRG, 
^'^Lieutenant-Colonel,  and  Aide-de-Camp  to  Lord  Catiicart." 

A  special  messenger  was  dispatched  to  Deal ;  and  the  letter  reached 
the  admiral  between  three  and  four  o'clock.  The  morning  proved  foggy, 
the  telegraph  could  not  work,  and  Admiral  Foley  was  saved  from  an  in- 
voluntary deception.  Directly  the  letter  was  forwarded,  Du  Bourg  en- 
tered the  post-chaise,  and,  with  every  appearance  of  haste,  departed  for 
London.  Wherever  he  changed  horses  the  news  was  spread,  and  the 
post-boys  rewarded  with  napoleons.  On  his  arrival  at  Bexlcy-heath,  the 
intelligence  was  acquired  that  the  telegraph  could  not  have  acted  ;  on 
which  he  told  them  not  to  drive  so  fast.  He  then  added  that  the  war 
was  over ;  that  Bonaparte  was  cut  into  a  thousancj  pieces  ;  and  that  the 
Cossacks  fought  for  a  share  of  his  body.  At  the  Marsh-gate,  Lambeth, 
he  entered  a  hackney-coach,  after  informing  the  post-boys  that  they 
might  spread  the  news  as  they  returned.  In  the  mean  time  information 
reached  the  stock  exchange  ;  and  by  a  little  after  ten  it  was  filled  with 
rumors  of  general  officers,  dispatches  for  government,  victories  and  post- 
chaises  and  four.  Expresses  from  the  various  places  where  Du  Bourg 
had  changed  horses  poured  into  the  principal  speculators.  The  funds 
rose  on  tTie  news.  Application  was  made  to  the  lord  mayor,  but,  as  his 
lordship  had  received  no  intelligence,  they  declined. 

On  the  morning  of  the  same  day,  about  an  hour  before  daylight,  two 
men,  in  the  habiliments  of  foreigners,  landed  in  a  six-oared  galley,  called 
on  a  Mr.  Sandon,  at  Northfleet,  and  handed  him  a  letter,  purporting  to 
be  written  by  one  whom  he  formerly  knew,  begging  him  to  take  the 
bearers  to  London,  as  they  had  great  public  news  to  communicate.  The 
request  was  complied  with.  Between  twelve  and  one  o'clock  in  the 
afternoon  of  that  day,  three  persons,  two  of  whom  were  dressed  as  French 
officers,  proceeded  in  a  post-chaise  and  four,  the  horses  of  which  were 
bedecked  with  laurel,  over  the  then  narrow  and  crowded  thoroughfare  of 
London  bridge.  While  the  carriage  proceeded  with  an  almost  ostenta- 
tious slowness,  small  billets  were  scattered  among  the  anxious  gazers, 
announcing  that  Bonaparte  was  dead,  and  the  allies  in  Paris.  Through 
busy  Cheapside  and  crowded  Fleet-street,  the  occupants  of  the  carriage 
paraded  their  intelligence.  They  passed  over  the  fine  bridge  of  Black- 
friars,  drove  rapidly  to  the  Marsh-gate,  got  out,  took  ofi"  their  military, 
put  on  round  hats,  and  speedily  disappeared.     The  news  again  spread 


Stock  Exchange  Fraud.  157 

far  and  wide.  The  neigliborhood  of  the  stock  exchange  was  once  more 
full  of  exaggerated  reports.  The  funds  rose.  What  could  resist  such 
accumulated  evidence  ?  The  aide-de-camp  of  Lord  Cathcart,  at  Dover  ; 
two  foreigners  at  Northfleet  with  dispatches ;  private  expresses  from 
various  places,  all  tended  to  convince  the  members  that  there  must  be 
some  foundation  for  the  reports.  Application  was  made  to  the  ministry, 
but  they  knew  nothing.  Large  bargains  were  made.  The  scene  at  the 
stock  exchange  is  described  by  those  who  witnessed  it  as  baffling  all  de- 
scription. Yet  still  there  was  some  doubt,  so  long  as  government  re- 
mained ignorant  of  the  important  intelligence.  And  as  hour  after  hour 
of  anxious  doubt  passed  by,  it  would  be  difficult  to  imagine  the  feelings 
of  many  who  had  suffered  from  the  delusion.  "  To  this  scene  of  joy," 
says  one,  "  and  of  greedy  expectation  of  gain,  succeeded,  in  a  few  hours, 
that  of  disappointment,  shame  at  having  been  gulled,  the  clenching  of 
fists,  the  grinding  of  teeth,  the  tearing  of  hair,  all  the  outward  and  visible 
signs  of  those  inward  commotions,  of  disappointed  avarice  in  some, 
consciousness  of  ruin  in  others,  and,  in  all,  boiling  revenge."^  A  com- 
mittee was  appointed  by  the  stock  exchange,  and  various  circumstances 
tending  to  prove  a  conspiracy  were  discovered.  On  the  Saturday  pre- 
ceding the  Monday  on  which  the  deception  was  attempted,  consols  and 
omnium,  to  the  extent  of  £820,000,  were  purchased  for  various  indi- 
viduals, many  of  whom  were  seriously  implicated.  A  name  known  and 
loved  in  England  was  said  to  be  included.  Lord  Cochrane,  endeared 
to  the  English  people  by  the  most  gallant  naval  successes  ever  achieved, 
was,  on  the  21st  of  June,  1814,  tried  with  some  others  at  the  Court  of 
Queen's  Bench,  and  sentenced  to  twelve  months  imprisonment.  His  lord- 
ship and  another  were  fined  £1,000  each.  They  were  also,  in  addition, 
to  stand  one  hour  in  the  pillory;  but  this  Avas  remitted.  The  decision, 
with  regard  to  Lord  Cochrane,  (now  Earl  of  Dundonald,*)  excited  great 
animadversion.  A  conviction  was  very  generally  expressed  that  there 
was  some  doubt,  and  the  public  feeling  was  disposed  to  accord  him  the 
benefit.  This  might,  perhaps,  have  been  a  national  sympathy  towards 
one  of  the  most  gallant  sailors  in  the  royal  navy.  The  actions  of  Lord 
Cochrane  have  been  rarely  surpassed;  and  if,  as  he  always  steadily 
affirmed,  and  as  many  circumstances  tend  to  prove,  he  was  more  sinned 
against  than  sinning,  it  is  one  of  the  most  melancholy  instances  in  mod- 
ern record  of  great  achievements  being  followed  by  great  misfortunes. 
The  name  of  Cochrane,  for  the  last  thirty  years,  has  been  associated 
with  fraud,  because  mankind  are  too  prone  to  take  on  trust  the  traditions 
of  their  fathers.  It  is  pleasant  to  be  able  to  add,  that  the  present  sov- 
ereign has  rewarded  his  lordship  for  his  past  sufferings,  and  evinced  her 
belief  in  his  innocence  by  restoring  to  him  those  honors  of  which  he 
should  never  have  been  deprived. 

*  Public  opinion  subsequently  acquitted  Lord  Dundonald  of  participation  in  the 
stock-jobbing  movement.     He  died  in  December,  1860. 


11 


158 


'Y^  History  of  the  Bank  of  England. 


CHx\PTER    XVI, 


PEACE     OF     1815 CONTINUATIOX     OF     BANK     RESTRICTION COMMERCIAL     DIFFICULTIES 

BONUS     ON     THE    BANK    CAPITAL PARTIAL    RESUMPTION    OF     CASH    PAYMENTS BULLION 

COMMITTEE LEGAL  DECISIONS— MR.  PEEL's  CURRENCY  BILL RETURN  TO  CASH  PAY- 
MENTS  THE  DEAD  WEIGHT PENSION  LIST DIMINUTION  OF  DIVIDEND PARLIAMEN- 
TARY   DISCUSSION FORGERY    OF    FAUNTLEROT. 

In  1815  a  universal  song  of  triumph  arose,  from  the  prospect  of  that  peace 
which  had  been  denied  to  Europe  for  nearly  a  quarter  of  a  century.*  The 
terrible  excitement  of  "  the  hundred  days"  had  passed.  The  earth  ceased  to 
be  nourished  with  human  blood.  The  field  of  Waterloo,  that  field  which 
was  described  by  the  great  man  there  as  a  "battle  of  giants,"  had  dftrkened 
every  gleam  of  hope  for  him  who  in  three  years  had  destroyed  the  compact 
strength  o.f  Austria,  crushed  the  military  power  of  Prussia,  and,  by  forcing 
the  czar  to  sign  the  treaty  of  Tilsit,  had  placed  the  sceptre  of  the  continent 
in  his  own  hands.  Throughout  the  world  there  was  a  general  yearning  after 
repose.  The  sight  of  an  empty  treasury  was  attended  to  when  the  voice  of 
humanity  was  scoffed  at.  The  tranquillity,  which  gave  independence  to 
Holland  and  freedom  to  the  Swiss,  which  rewarded  the  guerilla  of  the  Span- 
ish hills  and  the  patriot  of  Portugal  for  their  unyielding  defence  of  their 
country,  was  of  no  less  importance  to  England.  The  relations  of  commerce, 
"  the  golden  chain  of  nations,"  which  tend  to  bind  the  whole  earth  in  one 
tie  of  brotherhood,  were  once  more  resumed.  Since  then,  civilization  has 
asserted  its  proper  influence.  The  development  of  science,  for  social 
benefit,  its  true  end  and  aim,  has  rapidly  progressed.  The  poor  man  is 
no  more  regarded  as  a  serf.  The  horrors  of  war,  and  the  ancient  antipa- 
thies of  nations,  are  passing  into  traditions.  "  Poverty  preserved  the 
peace  of  Europe,"  says  an  eloquent  writer.     The  goldf  which  had  kept 

*  The  treaty  of  peace  with  the  United  States  had  been  signed  at  Ghent,  Dec.  24, 1814. 
f  Gold  at  one  time  (1812)  reached  £5  8s.,  a  difference  of  30  per  cent.     The  an- 
nexed table  shows  the  changes  from  1809  to  1821.     (Doubleday's  Financial  History 
of  England,  p.  277.) 

Price  of  Diff'cefrom  Amount  in 

Teaks.  Gold.  Mint  Prices.     Nominal  Taves.  Gold  Curr^cy. 

£    s.    d.  &  £ 

1809, 4     9  10     ..   161-    per  ct.  ..  71,887,000  ..  60,145,000 

1810, 4     5  0..     9  1-10"  ..   74,815,000   ..  68,106,000 

1811, 4  17  1      ..24^         "  ..   73,621,000   ..  55,583,000 

1812, 5     1  4     ..   30            "  ..   73,707,000   ..  51,595,000 

Sept.  to  Dec,  1812, 5     8  0     . .  38i 

1813, 5     6  2     ..36  1-10"  ..   81,745,000  ..  52,236,000 

Nov.,  1812,  to  Mch.,  1813,  5  10  0     . .  41  " 

1814, 5     1  8     ..   301          "  ..   83,726,000  ..  58,333,000 

1815, 4  12  9     ..18  8-9     "  ..   88,394,000  ..  66,698,000 

1816 4     0  0     ..     2^.          "  ..   73,909,000  ..  72,062,000 

Oct.  to  Dec,  1816 3  18  6     . .  under  1    " 

1817, 4     0  0     ..     24          "  ..   58,757,000   ..  57,259,000 

1818, 4     1  5      ..      5            "  ..    59,391,000   ..  56,025,000 

1819,  4th  Feb., 4     3  0     . .     6J-          "  ..   58,288.000   ..  54,597,000 

1820, 3  17  lOi-  ..         par.  ..   59,812,000   ..  59,812,000 

1821, 3  17  lOi  ..         par.  ..  61,000,000  ..  61,000,000 


Declarations  of  Mr.  Mellish.  159 

the  despot  at  bay,  had  been  gained  in  greater  proportions  from  the  arti- 
san and  the  sons  of  the  soil,  than  from  the  master  manufacturer  or  the 
country  gentleman.  The  war,  indeed,  had  affected  all  classes ;  and  the 
Bank  of  England,  in  its  different  departments,  had  experienced  its  effect. 
The  funds,  which  had  drooped  or  risen  from  hour  to  hour,  as  good  or  bad 
fortune  prevailed,  had  created  business  to  an  extent  varying  Avith  the  ex- 
citement of  the  period.  The  large  advances  to  the  State,  the  cessation 
of  cash  payments,  the  general  prosperity  of  trade,  made  a  period  of  hos- 
tilities a  period  of  profit.  The  prospect,  therefore,  of  recommencing 
payments  in  specie,  to  accomplish  which  it  would  be  necessary  to  collect 
a  large  amount  of  bullion,  was  an  important  consideration.  On  the  res- 
toration of  peace,  however,  the  restriction  was  continued  by  a  new  act, 
until  the  5th  July,  1816,  and  was  again  renewed  until  July,  1818. 

In  1814  the  State  repaid  the  three  millions  advanced  in  1800  without 
interest,  and  continued  in  1806  at  three  per  cent.,  until  six  months  from 
the  ratification  of  peace.*  The  three  millions  also,  lent  without  interest 
in  1808,  became  due  in  December,  1815.  This  money  had  been  advanced 
principally  in  consideration  of  the  large  public  balances  in  the  bank.  In 
consequence  of  these  deposits  remaining  undiminished,  the  chancellor  of 
the  exchequer  addressed  a  letter  to  the  governor,  claiming  the  continu- 
ance of  the  loan  until  April,  1816.  This  proposal  was  produced  before  a 
general  court  of  proprietors,  and  agreed  to. 

A  long  list  of  declarations  was  entered  on  the  books  of  the  House  of 
Commons,  by  Mr.  Mellish,  affirmatory  of  the  services  rendered  by  the 
corporation  to  the  State.  It  was  chiefly  enumerative  of  those  which  have 
been  already  alluded  to,  and  were  the  result  of  some  resolutions  proposed 

*  In  the  fourteen  years,  from  1801  to  1814,  the  British  army,  navy  and  ordnance, 
had  cost  £650,000,000.  To  show  the  enormous  burdens  upon  the  English  peojile  at 
■  the  close  of  the  continental  war,  (1815,)  when  the  jDopulation  of  the  United  Kingdom 
did  not  exceed  twenty  millions,  it  is  only  necessary  to  say,  that  the  annual  expendi- 
ture exceeded  one  hundred  and  twenty  millions  sterling,  or  abovit  £6  per  head. 
Their  income  was  derived  from  the  following  sources.  {See  British  Annual  Regis- 
ter for  1816,  pp.  429,  430.     Alison's  Europe,  vol.  4,  p.  589,  N.  Y.  edition.) 

Customs, £14,648,'700 

Excise, SOjlOYjOOG 

Stamps, 6,492,800 

Property  tax,  land  and  assessor's  taxes, 23,189,000 

Post-office 2,350,000 

Miscellaneous, 9,934,500 

Total  taxes  levied, £  86,722,000 

From  loans,  year  1815, 39,422,000 

Total,  year  1815, £126,144,000 

Mr.  Pitt  contemplated  the  extinction  of  the  whole  public  debt  before  the  year 
1846,  by  the  opiTution  of  the  sinking  fund,  and  had  provided  means,  which,  if  steadily 
adhered  to,  would  unquestionably  have  produced  that  result  even  at  an  earlier 
period;  the  disastrous  effects  which  have  actually  occurred  from  this  mode  of  con- 
tracting so  large  a  portion  of  the  debt  are  not  to  be  charged  so  strongly  as  an  error 
in  his  financial  sj'stem.  In  the  contracting  of  loans,  present  relief  was,  in  his  estima- 
tion, the  great  object  to  be  considered,  because  the  means  of  certain]}'  redeeming 
them  witliiu  a  moderate  period,  on  the  return  of  peace,  were  simultaneously  pro- 
vided. 


160 


History  of  the  Bank  of  England. 


by  Mr.  Grenfell.  Among  otliers  was  one  which  stated  that,  during  the 
existence  of  the  income  tax,  the  bank  had  made  the  calculations  on  the 
dividend  warrants,  deducted  the  money  from  the  interest  of  the  fund 
holders,  and  paid  it  in,  without  charge,  to  the  account  of  the  government, 
and  that,  in  one  year,  the  number  of  warrants  from  which  this  reduction 
had  been  made  amounted  to  505,600.  The  cost  of  this  was  very  great ; 
but  it  bore  no  comparison  whatever  to  the  enormous  saving  effected  by 
the  government,  through  the  interference  of  the  corporation. 

The  distress  of  1811  had  been  relieved.  The  expulsion  of  the  French 
from  Portugal,  and  the  noble  achievements  of  our  army  in  Spain,  had 
once  more  unclosed  the  trade  with  the  Peninsula.  These,  with  other 
causes,  again  produced  the  temptation  to  over-trade.  "The  departure  of 
the  French  from  Portugal,"  says  an  authority  of  the  day,  '"has  once  more 
opened  commerce  with  that  country  ;  and  vast  quantities  of  goods  of  the 
manufacture  of  Great  Britain  are  now  shipping  for  Lisbon  and  Oporto." 
"Large  orders  for  all  kinds  of  woollen,  linen  and  cotton  goods,  have  arrived 
here  for  Portugal  and  South  America."  The  warehouses  were  soon  filled, 
though  not  with  so  much  rapidity  as  in  the  first  trade  to  South  America. 
"  It  was  not  yet  marked,"  says  Mr.  Tooke,  "  by  such  eagerness  of  specula- 
tive shipment  as  had  distinguished  1808  and  1809.*"  A  sufficient  quan- 
tity was,  however,  exported  to  glut  the  markets ;  prices  were  ruinously 


*  In  order  to  attain  to  some  definite  idea  of  these  things,  it  will  be  necessary  to 
look  at  the  documents  which  go  to  prove  them.  Let  us  look  at  the  extreme  range 
of  prices  of  wheat  and  other  grain  in  1809 — 1810,  when  the  bank  issues  were  in- 
creased, in  A.  D.  1815. — Doubleday's  Financial  Hist.  England,  p.  157. 

An  account  of  the  average  prices  of  all  sorts  of  grain  from  1792  to  1815,  inclusive, 
laid  before  Parliament. 

Wheat.           Rye.           Barley.           Oats.           Beans.  Peas.  • 

Teaks.                               «.    d.            s.    d.            s.    d.            s.    d.            s.    d.  a.    d. 

1792, 42  11    ..    80     8    ..    26     9    ..    17     7    . .    31     6  ..  32     8 

1793, 48  11    ..    35  11    ..    31     9    . .    21     3    ..    37     8  . .  38    4 

1794, 51     8    ..    37     9    ..    32  10    ..    22     0    . .    42     6  . .  46     8 

1795, 74     2    ..    48     5    . .    37     8    . .    24     9    . .    46     8  . .  53     4 

1796, 77     1    ..    47     0    ..    35     7    ..    21     9    . .    38  10  . .  43     6 

1797, 53     1    ..    81  11    ..    27     9    . .    16     9    ..    27     6  . .  33     5 

1798, 50     3    ..    30  11    ..    29     1    . .    19  10    . .    30     1  . .  35  11 

1799, 67     6    ..    43     9    ..    36     0    . .    27     7    . .    44     7  .  .  45     2 

1800, 113     7    ..    76  11    ..    60     0    ..    39  10    ..    63     8  . .  67     5 

1801, 118     3    ..    79     9    .,    67     9    ..    36     6    ..    62     8  . .  67     8 

1802, 67     5    ..    43     3    ..    33     1    . .    20     7    . .    36     4  . .  39     6 

1803, 56     6    ..    36  11    ..    24  10    ..    21     3    . .    34     8  ..  38     6 

1804, 60     1    ..    87     1    ..    30     4    ..    23     9    ..    38     7  ..  40  10 

1805, 87  10    ..    54     4    ..    44     8    . .    28     0    . .    47     5  . .  48     4 

1806, 79     0    ..    47     4    ..    38     6    . .    25     8    . .    43     9  . .  43     6 

1807, 73     3    ..    47     6    . .    88     4    . .    28     1    . .    47     3  . .  55  11 

1808, 79     0    ..    52     4    ..    42     1    . .    33     8    . .    60     8  . .  66     7 

1809, 95     7    ..    60     9    ..    47     3    . .    32     8    . .    60     9  . .  60     2 

1810, 106     2    ..    59     0    ..    47  11    ..    29     4    . .    53     7  ..  55     9 

1811, 94     6    ..    49  11    ..    41  10    ..    27  11    ..    47  10  ..  51     6 

1812, 125     5    ..    75  11    ..    66     6    , .    44     0    . .    72     8  . .  73     7 

1813, 108     9    ..    70     7    ..    58     4    . .    39     5    . .    76     5  . .  78     6 

1814, 73  11    ..    44     6    ..    37     4    . .    26     6    . .    46     7  . .  50     0 

1815, 64     4    ..    37  10    ..    30     3    . .    23  10    . .    36     1  . .  38  10 


Bonus  on  the  Bank  Capital.  161 

low,  and  goods  were  sold  on  terms  which  scarcely  paid  the  charges  of 
insurance  and  shipment. 

Circumstances  connected  with  the  South  American  speculations  have, 
perhaps,  been  too  lightly  passed  over.  They  form  an  episode  in  history 
which  approaches  nearly  to  romance,  and,  therefore,  call  for  a  brief 
record.  Tempted  by  the  reports,  which  were  plentiful,  of  the  wealth  and 
weakness  of  the  Spanish  colonies,  Sir  Home  Popham  set  sail  from  the 
Cape  of  Good  Hope,  which  he  had  just  taken,  for  South  America,  and, 
on  his  arrival,  attacked  and  carried  Buenos  Ayres.  The  adventure  had 
been  undertaken  on  the  sole  authority  of  Sir  Home  ;  and  knowing  that 
success  is  often  the  great  justifier,  he  sent  a  circular  manifesto  to  the 
merchants  and  manufacturers  of  Great  Britain,  which  occasioned  much 
excitement.  A  land,  abounding  with  gold,  had  been  conquered  ;  a  whole 
continent  was  open  to  British  enterprise.  A  million  of  dollars. Avas  sent 
to  London,  and  a  sufficient  amount  was  retained  for  contingent  expenses. 

"When  information  of  the  wild  expedition  first  arrived  in  London,  or- 
ders were  sent  to  recall  Sir  Home  ;  but  when  the  news  of  the  conquest 
arrived,  when  the  dollars  came  home,  and  the  commercial  prospects  were 
known,  an  order  of  council  was  gazetted,  stating  that  a  lawful  trade 
might  be  carried  on  in  Buenos  Ayres  and  its  dependencies.  The  trading 
interest  was  filled  with  exultation,  and  Sir  Home  Popiiam's  adventure 
was  sanctified  by  success.  "  Ministers  sanctioned  the  whole  scheme,"  says 
an  historian  ;  "  but  before  people  at  home  had  finished  rejoicing  for  the 
conquest,  the  conquest  was  no  more,  and  the  capturers  captive."  A  popu- 
lar insurrection  was  organized,  and  Sir  Home  narrowly  escaped  being 
made  prisoner  in  the  place  which  he  had  carried  with  a  mere  handfal  of 
men  ;  while  those  who  had  sent  their  merchandise  keenly  lamented  their 
thoughtless  confidence. 

Mr.  TooKE  says,  in  his  "  History  of  Prices,"  "  that  from  1814  to  1817* 
there  was  a  considerable  depression  in  nearly  all  productions,  and  in  the 
value  of  all  fixed  property."  In  Holland  our  goods  were  bought  cheaper 
than  in  England,  and  many  merchants  purchased  them  for  home  con- 
sumption. In  1815  and  in  1816  there  were  5,014  bankruptcies,  63  of 
which  were  bankers ;  the  number  of  stoppages  and  compositions  being 
probably  in  proportion. 

The  various  periods  of  excitement  and  depression  from  1797  to  1816, 
during  the  whole  of  which  the  company  had  been  restrained  from  paying- 
its  notes  in  gold,  appear  to  have  worked  altogether  bene^cially  for  the 
interests  of  the  proprietors  of  bank  stock.  The  years  1799,  1801,  1802, 
1804  and  1806,  had  each  produced  a  money  bonus.  In  the  following 
year  the  regular  dividend  was  raised  from  seven  to  ten  per  cent.  These 
ifiodes  of  enlarging  the  profits  of  the  proprietary  were  legitimate  and 
just.  In  1816  a  bonus  of  a  more  extraordinary  kind  took  place.  It  can 
indeed  be  only  accounted  for  by  the  constant  success  which  had  attended 
the  company,  by  the  large  gains  which  accrued  to  them  as  the  great  cir- 
culating medium  of  the  country,  and  above  all  by  there  being  no  neces- 
sity to  keep  a  large  amount  of  bullion  to  meet  the  payment  of  their 
notes.     The  interest  saved  by  the  latter  circumstance  alone  must  have 

*  The  extraordinary  fluctuations  in  the  value  of  goods  during  the  inflation  of 


162 


History  of  the  Bank  of  England. 


amounted  to  an  enormous  sum,  and  these  facts,  united,  must  be  accepted 
as  some  cause  for  tlie  policy  -which  dictated  tlie  announcement  that  an 
addition  of  twenty-five  per  cent,  would  be  made  upon  the  capital  stock 
of  each  proprietor,  in  proportion  to  liis  share.  An  act  of  Parliament 
was  necessary  to  carry  this  into  effect,  and  the  bank  directors  were 
authorized  to  increase  the  capital  from  £11,042,400  to  £14,553,000,  at 
which  amount  it  now  remains. 

It  was  not  possible  for  the  ministry  to  witness  such  an  evidence  of 
wealth  without  endeavoring  to  partake  of  it.  They  compelled  the  bank, 
therefore,  in  return  for  this  permission,  to  give  a  bonus  to  their  proprie- 
tors, to  lend  three  millions  at  three  per  cent,  for  two  years,  thus  making 
them  pay  about  eighty  thousand  pounds  for  the  privilege  of  dividing 
their  own  capital,  although  the  chancellor  acknowledged,  "  This  is,  in 
other  words,  only  granting  permission  to  the  proprietors  to  divide  among 
themselves  three  millions  of  their  own  money,  in  consideration  of  their 
advancing  a  similar  sum  for  the  public  service." 

The  policy  of  this  bonus  is  not  even  questionable.  It  has  entailed  a 
heavy  charge  upon  the  management  of  the  bank  since  that  period.  The 
interest  of  three'  millions  at  ten,  eight  and  seven  per  cent,  respectively, 
has  necessarily  pressed  on  its  resources.  The  prosperity,  however,  which 
had  marked  the  progress  of  the  corporation  from  1797,  the  continuance 


paper  money,  in  1808 — 1812,  compared  with  the  specie  quotations  of  1792,  are  in- 
dicated in  the  annexed  table:  [The  term  fodder  ov  f other  is  a  local  weight,  equiva- 
lent to  about  2,400  lbs. — Webster.] 


Tin. 

Lead. 

ieonesa  Wool. 

Tallow. 

Years. 

Cwt. 

Fodder. 

per  lb. 

per  lb. 

Cwt.     Cwt. 

8.  d. 

& 

s. 

8.  d. 

s.  d. 

8.       8. 

1792, 

92  6  . 

.     20 

5  .. 

4  6  to 

4  10  . 

.  42  to  43 

"  

103  6  . 

.  18 

0  .. 

3  7  " 

4  10  . 

.'  46  "  47 

1794, 

103  6 

.  20 

5  . 

3  8" 

4  10 

.  38  "  39 

" 

100  6 

.  18 

0  . 

3  6" 

3  10  . 

.  50  "  51 

1796, 

101  6 

.  21 

10  . 

3  8" 

4  3 

.  68  "  70 

"  

102  6 

.  20 

10  . 

3  8" 

4  0 

.   58  "  60 

1798, 

102  6 

100  6 

.  19 

10  . 

3  10  " 

4  4 

.  49  "  50 
.  56  "  57 

1800, 

104  0 

.  22 

10  . 

4  0" 

4  9 

.  58  "  59 

'<  

110  0 

.  24 

10  . 

4  7" 

5  '4 

.  66  "  68 

1802, 

114  6 

.  28 

0  . 

5  9" 

6  0 

.  63  "  64 

" 

115  6 

.  33 

10  . 

5  10  " 

6  3 

.  64  "  66 

1804, 

• 115  6 

.  33 
.  33 

0  . 

10  . 

6  6" 

6  9 

.  68  "  69 
.  70  "  71 

1806, 

128  6 

.  41 

.  38 

0  . 
0  . 

.67" 

6  9 

.  66  "  67 
.  54  "  55 

1808, 

118  6 

. .  38 

0  . 

.67" 

6  9 

..  70  "  71 

"  

120  6 

. .  43 

0  . 

.10  0  " 

10  6 

..  110  "112 

1810, 

128  6 

. .  38 

0  . 

.13  0  " 

14  0 

. .  83  "  84 

"  

174  0 

. .  33 

0  . 

7  0" 

8  0 

.  64  "  65 

1812, 

139  6 

. .  30 

0  . 

.86" 

10  0 

. .  72  "  84 

a 

131  6 

. .  29 
. .  30 

0  . 
0  . 

.86" 
.  80" 

9  6 
9  0 

.  64  "  65 

1814, 

174  6 

. .  107  "110 

"  

^  , 

.  32 

0  . 

. .  " 

.  . .  "  . . 

" 

168  6 

. .  34 

0  . 

7  0" 

8  0 

. .  87  "  88 

1815, 

148  6 

. .  28 
. .  25 

0  . 
0  . 

.76" 
.60" 

8  0 
7  0 

.  81  "  82 

152  6 

. .  59  "  60 

General  Profits — Bullion  Speculators.  163 

of  the  war,  the  demand  for  discounts,  the  large  circulation  of  its  issues, 
must  be  received  as  an  apology.  The  time  named  for  the  return  of  cash 
payments  had  two  years  to  run.  The  war,  which  had  tended  to  enrich 
the  company  for  so  many  years,  might  again  break  out.  Their  charter 
embraced  a  considerable  period  before  its  expiration.  All  these  circum- 
stances, combined  with  the  great  success  that  had  hitherto  distinguished 
the  career  of  the  institution,  tended,  doubtless,  to  produce  a  mental  in- 
toxication, resulting  in  an  act  Avhich,  though  favorable  to  the  proprietary 
in  many  respects,  caused  a  fall  in  the  price  of  their  stock.  The  period 
was  equally  beneficial  to  other  corporations.  The  private  bankers^  bene- 
fited. The  merchant  made  larger  gains.  The  employee  was  paid  a 
higher  salary.  The  master  made  more  profits.  The  servant  received 
increased  pay.  And  amid  all  this  scene  of  public  welfare  the  bank  alone 
was  censured  for  advantaging  with  the  rest,  and  was  accused  in  the 
House  of  Commons  of  being  favored  too  much  by  government,  because 
prosperity  followed  in  the  wake  of  skill.  A  reference  to  the  dates  when 
many  of  the  existing  companies  were  founded  will  show  that  they  owe 
their  existence  to  this  period.  The  principle  of  life  assurance,  that  prin- 
ciple which  cannot  be  urged  too  strongly,  received  a  further  impulse ; 
,  and  the  origin  of  many  of  those  companies  now  holding  a  high  position, 
may  be  traced  to  the  general  enterprise  excited  by  v/ar  prices  and  war 
■  profits. 

In  1817  the  directors,  desirous,  perhaps,  of  testing  the  feeling  of  the 
public  with  regard  to  metallic  payments,  announced,  that  after  the  2d  of 
May  of  that  year,  they  would  pay  cash  for  all  their  notes  of  one  and  two 
pounds,  dated  prior  to  the  1st  of  January,  1816,  or  exchange  them  for 
new  notes  of  the  same  value.  The  confidence,  however,  of  the  public 
was  great,  and  scarcely  any  demand  was  made  on  their  coffers.  In  Oc- 
tober of  the  same  year  a  further  notice  was  issued,  that  on  and  after  the 
1st  day  of  October,  they  would  be  ready  to  pay  gold  for  all  their  notes 
dated  prior  to  1st  of  January,  18l7.f  Every  exertion,  since  the  com- 
mencement of  peace,  had  been  made  to  resume  specie  payment  with 
safety.  The  collection  of  bullion  had  been  rapid,  and  to  a  large  amount ; 
and  it  was  soon  found  that  these  precautionary  measures  had  not  been 
thrown  away.  The  diff'erence  between  a  legitimate  demand  for  gold  by 
the  public,  and  a  demand  for  the  same  material  by  speculators,  was 
rapidly  witnessed. 

*  At  the  period  of  the  crisis  of  1797  the  number  of  country  banks  has  been 
stated  at  about  two  hundred.  There  were  no  licenses  required  for  banking  at  this 
time,  nor  until  the  year  1808.  In  1809  seven  hundred  and  two  licenses  were  granted 
to  country  bankers ;  and  from  that  time  they  increased,  year  by  year,  to  nine  hun- 
dred and  Jlfty,  in  the  yeav  ISli  ;  since  which  period  they  have  decreased.  Thus, 
then,  in  the  period  between  1*797  and  1815  the  country  banks  have  been  nearly 
quintupled ;  an  enormous  increase,  and  startling  even  to  a  rash  calculator.  We 
must  not,  however,  fall  into  the  grievous  error  of  imagining  that  this  increase  im- 
plied a  quintujile  issue  of  country  notes. — Doubleday's  ^'inancia/  History  of  England, 
p.  234. 

f  There  cannot,  we  conceive,  be  a  grosser  error  than  to  suppose  that  the  govern- 
ment will  have  a  greater  command  of  bullion  for  its  foreign  expenditure,  if  the  do- 
mestic circulation  be  confined  almost  exclusively  to  paper.  The  actual  store  of  the 
precious  metals  which  a  country  may  possess,  though  of  the  greatest  use  and  ad- 


164  History  of  the  Bank  of  England. 

When  the  one  and  two  pound  notes,  that  description  of  paper  lield 
principally  by  the  poor  man,  were  called  in,  the  amount  of  cash  claimed 
was  not  more  than  one  million.  When,  however,  it  was  announced  that 
all  notes  prior  to  a  particular  date  would  be  paid  in  specie,  the  bullion 
speculator  stepped  in,  took  advantage  of  the  exchanges,  and  sent  more 
than  five  millions  to  the  continent.  On  the  report  of  Mr.  Peel,  the 
house  passed  a  bill  in  two  nights,  restraining  the  bank  from  paying  the 
notes  alluded  to. 

That  a  great  increase  in  bullion  tended  to  justify  this  measure  is  indis- 
putable. In  1816  and  1817,  some  of  the  country  bankers  found  it  diflB- 
cult  to  dispose  of  their  coin.  Preference  was  shown  to  their  notes  ;  and 
it  cost  one  firm  £100  to  transmit  its  surplus  specie  to  London.  At 
another  period,  in  bringing  one  thousand  guineas  to  a  London  banker, 
the  latter  begged  as  a  favor  that  the  gold  might  not  be  left,  as  he  had 
sent  so  much  to  the  bank,  and  did  not  like  to  trouble  the  establishment 
■with  any  more. 

During  the  imperial  career  of  Bonaparte,*  it  had  been  his  favorite 
idea  that  England  would  be  eventually  rendered  powerless,  by  draining 
her  of  gold.  In  this  he  was  strengthened  by  the  language  held  by  the 
opponents  of  government,  and  especially  by  the  report  of  the  Bullion  . 
Committee.  In  Knight's  "  History"  we  read  :  "  The  members  of  the 
parliamentary  opposition  and  the  opposition  newspapers  had  assured  the 
world  that  Great  Britain  was  altogether  incapable  of  continuing  a  strug- 
gle which  was  draining  up  her  resources ;  that  she  was  exhausted  and 
impoverished  ;  and  that  every  efibrt  she  made  against  the  power  and  will 
of  France,  only  hurxied  on  her  final  ruin.  But  here  was  a  voice  of 
another  kind  ;  here  a  committee  of  the  House  of  Commons,  composed  of 
men  of  name  and  reputation,  some  of  whom  had  recently  belonged  to  the 
ministry,  declared  in  a  report  to  the  whole  country,  that  the  paper  cur- 
rency was  depreciated,  was  becoming  every  day  more  and  more  like  the 
asslgnats  of  the  French  revolutionists,  and  that  the  only  remedy  that 
could  be  proposed  was  the  impracticable  and  impossible  resumption  of 
cash  payments  ;  here  a  noble  lord,  who  was  lately  prime  minister,  sup- 
ports the  principles  laid  down  in  the  report ;  here  another  noble  lord 
tells  his  tenantry  he  will  not  take  depreciated  bank  notes  for  his  rent, 

vantage  in  any  sudden  demand,  occasioned  by  an  unfavorable  balance  of  payments, 
can  never  be  sufficient  to  supply  a  continued  foreign  expenditure  of  any  magnitude. 
The  means  of  expenditure,  if  we  suppose  that  bullion  must  form  a  part  of  it,  can 
only  be  abundant,  when,  as  fast  as  the  precious  metals  are  sent  out  in  one  quarter, 
a  steady  supply  of  them  flows  in  ft-om  other  quarters.  But  this,  of  course,  can  only 
happen  when  bank  notes  and  guineas  are  precisely  of  the  same  value,  and  when,  in- 
stead of  the  scanty  influx,  occasioned  by  the  precarious  and  uncertain  wants  of 
government,  a  large  and  steady  demand  for  bullion,  to  maintain  the  accustomed 
circulation,  produces  its  invariable  concomitant — a  large  and  steady  supply. — Ediri- 
lurgh  Review,  1819,  p.  461. 

*  England  had  borrowed  five  hundred  millions  sterling  during  the  Bonapaetb 
war,  ending  in  1815,  and  the  revenue  had  reached  the  enormous  sum  of  seventy-two 
millions  sterling,  when  the  population  and  wealth  of  the  nation  were  scarcely  two- 
thirds  what  they  are  now. 

Table  showing  the  reduction  of  the  national  debt  in  every  year,  from  1786  to 
181G  ;  the  stock  redeemed  by  them  each  year  ;  the  loans  contracted,  with  the  public 


Mr.  PeeVs  Currency  Act.  165 

and  finds  other  peers  ready  to  back  him,  and  support  the  argument  that 
a  national  bankruptcy  is  imminent  and  inevitable.  These  men  must 
know  better  than  we  the  real  state  and  prospects  of  the  cour^try.  Allans 
then  !  let  us  persevere  a  little  longer ;  let  us  burn  all  English  merchan- 
dise, wherever  found ;  let  us  punish  all  who  attempt  to  bring  English 
goods  into  the  continent,  and  for  the  triumph  of  this  great  system  let  us 
brave  and  despise  the  remonstrances  and  the  enmity  of  the  czar."  "  Yet, 
after  all,  the  bullionists  may  be  said,  without  perhaps  intending  it,  to  have 
done  a  fatal  injury  to  the  emperor  of  the  French,  for  through  them  he  was 
encouraged  to  persevere,  and  even  to  attempt  to  coerce  the  czar,  and 
hence  followed  the  Russian  campaign,  and  the  disastrous  retreat  from 
Moscow." 

Another  attempt  was  made,  in  1818,  to  procure  a  dividend  of. the  en- 
tire gains*  of  the  corporation.  Nathaniel  Grundy,  having  been  nega- 
tived in  his  endeavor  in  the  bank  parlor,  had  recourse  to  the  Queen's 
Bench,  where  he  met  with  that  success  which  the  nature  of  his  application 
merited.  It  is  difficult  seriously  to  entertain  the  idea  of  dividing  all  the 
profits  of  an  establishment  like  the  bank,  liable  to  pecuniary  calls  of  great 
magnitude  ;  and  the  affair  may  be  dismissed  as  an  evidence  of  the  short- 
sightedness of  those  who  would  act  either  without  evidence  by  which  to 
judge,  or  capacity  to  comprehend  the  consequences. 

revenue  of  the  State  for  the  same  time. — Moeeau's  Tables  ;  Perier's  Tables,  153, 154, 
246  ;  Pari.  Pap.,  1822,  <fee.,  145  ;  Porter's  Pari.  Tables,  i.,  1 ;  Colquhoun,  292,  294. 

Expenditure, 
including     inter- 
est of  debt,  fxmd-        Hevenue. 
ed  and  unfunded, 
and  sinking  fund. 

..    £16,1'79,34'7  ..£16,382,435 

. .       17,434,767  . .  17,674,395 

22,754,366  . .  17,440,809 

..       29,305,477..  17,374,890 

39,751,091  . .  18,243,876 

40,791,533..  18,668,925 

50,739,857  ..  20,518,780 

51,241,798..  23,607,945 

59.296,081  .  .  29,604,008 

61,617,988..  28,085,829 

73,072,468  ..  28,221,183 

62,373,480..  38,401,738 

54,912,890..  49,335,978 

67,619,475..  49,652,471 

76,056,796  ,.  53,698,124 

75,154,548..  58,902,291 

78,369,689..  61,524,113 

84,797,080  . .  63,042,746 

88,792,551  .  .  66,029,349 

94,360,728  . .  64,427,371 

99,004,241  .  .  63,327,432 

..      107,644,085..  63,211,422 

..      122,235.660..  70,926,215 

..     129,742,390..  72,131,214 

..      130,305,958..  66,834,494 

*  In  the  year  1797,  when  the  bank  suspended,  the  price  of  bank  stock  was  from 
115  to  146.     From  that  time  to  the  end  of  1800  the  extremes  were  118  to  176. 


Teaks. 

Sinking  fund. 

Stock  redeemed 
bij  sinking  fund. 

Loans 
contracted. 

1792,. 

£  1,458,504  . 

.    £1,507,100  .. 

1793,. 

1,534,970  . 

1,962,650  . . 

£4,500,000 

1794,. 

1,630,615  . 

2,174,405.. 

12,907,451 

1795,. 

1,672,000  . 

2,804,945  .  . 

42,090,646 

1796,. 

2,143,596  . 

3,083,455  . . 

42,736,196 

1797,. 

2,639,724  . 

.        4,390,670.. 

14,620,000 

1798,. 

3,369,218  . 

6,716,153  .. 

18,000,000 

1799,. 

4,294,325  . 

7,858,109  .  . 

12,500,000 

1800,. 

4,649,871  . 

7,221,338  . . 

18,500,000 

1801,. 

4,767,992  . 

7,315,002.. 

34,410,000 

1802,. 

5,310,511  . 

.        8,091,454.. 

23,000,000 

1803,. 

5,922,979  . 

.       7,733,421.. 

10,000,000 

1804,. 

6,287,940  . 

.     10,527,243.. 

10,000,000 

1805,. 

6,851,200  . 

.      11,395,692.. 

21,526,699 

1806,. 

7,615,167  . 

.      12,234,064.. 

18,000,000 

1807,. 

8,323,329  . 

,      12,807,070  . . 

12,500,000 

1808,. 

9,479,165  . 

.     14,171,407.. 

12,000,000 

1809,. 

10,188,607  . 

.     13,965,824.. 

19,532,000 

1810,. 

10,904,451  . 

.     14,352,771  . . 

16,311,000 

1811,. 

11,660,601  . 

.      15,659,194.. 

24,000,000 

1812,. 

12,502,860  . 

.     18,147,245.. 

27,871,325 

1813,. 

13,483,160  . 

.     21,108,442.. 

58,763,100 

1814,. 

15,379,262  . 

.     24,120,867.. 

18,500,000 

1815,. 

14,120,963  . 

.      19,149,684., 

45,135,589 

1816,. 

13,452,696  . 

.      20,280,098  .  . 

3,000,000 

166 


History  of  the  Bank  of  England. 


A  curious  scene  took  place  in  May  at  the  bank.  On  the  26th  of  that 
month  a  notice  had  been  posted,  stating  that  books  would  be  opened  on 
the  31st  of  Maj",  and  two  following  days,  for  receiving  subscriptions  to  the 
amount  of  seven  millions,  from  persons  desirous  of  funding  exchequer 
bills.  It  was  generally  thought  that  the  whole  of  the  sum  would  be  im- 
mediately filled,  and  great  anxiety  was  shown  to  obtain  an  early  admis- 
sion to  the  office  of  the  chief  cashier.  Ten  o'clock  is  the  usual  time  for 
public  business  ;  but  at  two  in  the  morning  many  persons  were  assembled 
outside  the  building,  where  they  remained  for  several  hours,  their  num- 
bers gradually  augmenting.  The  opening  of  the  outer  door  was  tlie  sig- 
nal for  a  general  rush,  and  the  crowd,  for  it  now  deserved  that  name,  next 
established  themselves  in  the  passage  leading  to  the  chief  cashier's  office, 
where  J;hey  had  to  wait  another  hour  or  two  to  cool  their  collective  im- 
patience. When  the  time  arrived  a  further  contest  arose,  and  they 
strove  lustily  for  an  entrance.  The  struggle  for  preference  was  tremen- 
dous ;  and  the  door,  separating  them  from  the  chief  cashier's  room,  and 
which  is  of  a  most  substantial  size,  was  forced  oti'  its  hinges.  By  far 
the  greater  part  of  those  who  made  this  effort  failed,  the  whole  £7,000,000 
being  subscribed  by  the  first  ten  persons  who  gained  admission. 

In  1819  a  trial,  well  worthy  recording,  took  place.  Mr.  Ransom,  an 
engraver,  having  paid  a  one  pound  note  to  a  Mr.  Mitchener,  the  latter 
found  it  was  detained  by  the  bank,  upon  the  ground  of  its  being  a 
forgery.  Upon  this,  Mr.  Mitchener  claimed  a  repayment  of  the  amount 
from  Ransom,  which  was  refused  until  the  return  of  the  note.  Mr. 
Mitchener  immediately  summoned  him,  and  procured  the  attendance  of 
Mr.  Fish,  an  inspector  of  the  bank,  with  the  note  in  question.  Ransom 
requested  to  look  at  it,  and  permission  having  been  granted,  he  deliber- 
ately placed  it  in  his  pocket,  and  avowed  his  intention  of  keeping  it. 
An  appeal  to  the  magistrate  was  of  no  avail,  as  he  declined  to  interfere ; 
on  which  Ransom  went  to  Mitchener's  house,  and  paid  the  twenty 
shillings. 

This  style  of  treatment  was  rather  too  decided  for  the  corporation 
quietly  to  permit ;  and  Fish,  it  is  to  be  presumed,  at  the  instigation  of 
the  directors,  made  a  charge  in  writing  against  Ransom  for  knowingly 
having  a  forged  note  in  his  possession.  On  this  the  magistrate  commit- 
ted him  to  Cold  Bath  Fields,  to  remain  there  till  duly  discharged  by  law. 
After  a  few  days'  incarceration,  he  was  liberated  on  bail.  Mr.  Ransom, 
however,  was  not  to  be  so  quietly  dismissed.  He  brought  an  action  for 
false  and  malicious  imprisonment  against  Fish  ;  and,  after  producing 
several  witnesses,  the  evidence  of  whom  went  to  show  the  note  was 


From  1801  to  1810  the  extremes  were  136  (1803)  to  288  (1809.)    The  extremes  from 
1807  to  1822  were  as  follows: 


1807, 208  @  235 

1808, 224  @  240 

1809 235  @  288 

1810, 273  @  276 

1811, 229  @  251 

1812, 212  @  232 

1813, 211  @  242 

1814, 234  @  266 


1815, 219  @  260 

1816, 215  @  262 

1817, 220  @  294 

1818, 207  @  292 

1819, 210  @  267 

1820, 215  @  226 

1821 221  @  240 

1822, 235  @  252 


Legal  Decision — Mr.  PeeVs  Currency  Act.  16*7 

genuine,  and  no  person  being  present  from  the  bank  to  prove  the  con- 
trary, as  the  directors  were  quite  unprepared  for  this  statement,  tbe  jury 
brono-ht  in  a  verdict  for  the  plaintiff  of  £100.  Previous  to  this  period, 
it  had  always  been  the  practice  of  the  bank  to  detain  the  forged  notes 
which  were  offered  to  them  for  payment,  with  the  view  of  saving  the 
public  from  being  again  imposed  upon.  Since  the  circumstances  enu- 
merated, however,  the  notes  have  been  returned  to  the  parties  presenting 
them ;  the  same  beneficial  result  being  obtained  by  stamping  the  word 
"  forged"  upon  them  in  several  places. 

The  value*  of  the  bank  paper,  which,  in  1815  and  1816,  was  about 
16|  per  cent,  below  that  of  gold,  rose,  in  1817  and  1818,  to  within  2|- 
per  cent,  of  bullion  ;  and,  in  "l  8 19,  the  depreciation  amounted  to  about 
4^  per  cent.  On  20th  January,  1819,  the  directors  submitted  a  resolu- 
tion to  government  to  the  effect,  that  there  was  little  probability  of  a  re- 
turn to  cash  payments  by  March,  1820,  and  that  it  would  be  preferable 
to  submit  to  a  parliamentary  inquiry  rather  than  to  delude  the  public 
with  an  expectation  not  likely  to  be  realized,  A  committee  of  secrecy 
was  appointed;  and  after  an  examination  of  merchants,  bankers  and  bank 
directors,  from  all  of  whom  opposite  opinions  were  elicited,  the  commit- 
tee concluded  by  recommending  a  certain  mode  of  action,  embodied  in 
a  report  which  Sir,  Peel  presented  to  the  house.  Lord  Brougham  says, 
the  attention  of  Parliament,  chiefly  through  the  press,  was  awakened  to 
the  state  of  our  affairs.  The  government  saw  that  something  must  be 
done  to  stop  the  depreciationf  of  bank  paper,  and  to  restore  the  stand- 
ard. At  length  the  government  of  Lord  Liverpool,  under  the  influence 
of  Mr.  Peel,  who  was  one  of  its  most  powerful  supporters,  though  not 
then  in  office,  undertook  the  settlement  of  the  question ;  and  a  commit- 
tee was  appointed,  which,  after  a  full  investigation  of  the  subject,  re- 

*  It  would  be  the  obvious  dictate  of  common  sense  and  good  policy  to  insist 
rigidly  that  the  bank  should  so  regulate  its  issues,  as  to  produce  the  same  equality 
between  bank  notes  and  guineas,  as  it  would  be  compelled  to  do,  if  the  restriction 
bill  had  not  passed.  But  though  the  most  obvious  views  of  policy  would  dictate 
precisely  the  same  remedy  for  the  separation  between  guineas  and  bank  notes, 
whether  it  arose  from  excessive  issues  of  paper,  or  from  a  deficient  supply  of  gold, 
yet  it  cannot  but  be  a  matter  of  considerable  interest  and  utility  to  ascertain  which 
of  these  two  causes  has  actually  produced  the  effect  in  question.  And  here  we  feel 
no  doubt  in  pronouncing,  that  all  the  circumstances  attending  the  peculiar  state  of 
our  currency  conspire  to  point  clearly  and  unequivocally  to  an  excessive  issue  of 
paper  as  its  main,  and,  indeed,  almost  sole  cause. — Edinburgh  Review,  1819,  p.  451. 
f  After  the  general  peace  was  concluded  at  Paris,  in  1814,  the  notes  of  the  Bank 
of  England,  judging  by  the  usual  tests — the  price  of  bullion  and  the  state  of  the 
exchange — began  to  rise  rapidly  in  their  value.  Towards  the  end  of  that  year  the 
price  of  gold  had  fallen  to  £4  5s.  per  ounce,  though  it  afterwards  rose  to  £4  10s., 
and  the  exchange  with  Hamburgh  had  improved  in  proportion.  During  this  period, 
however,  the  circulation  of  the  Bank  of  England  had  rather  been  increased  than 
diminished,  so  that  the  increase  value  of  bank  notes  could  not  have  been  the  conse- 
quence of  a  diminished  supply.  No  other  cause  can,  therefore,  be  assigned  for  it, 
but  an  increased  demand.  The  commerce  of  this  country,  contracted  lor  several 
years  before  by  violence  and  war,  within  the  narrow  circle  of  its  own  territory,  was 
suddenly  released  from  its  restraints.  The  intercourse  with  the  continent  of  Europe 
was  now  opened.  British  produce  was  exported  in  great  quantities. — Edinburgh 
Review,  Feb.,  1816,  p.  151, 


168  History  of  the  Bank  of  England. 

ported  in  favor  of  an  unqualified  resumption  of  cash  payments.    By  this 
report  the  bank  were  liable  to  pay,  on 

30th  of  January,  1819, £33,894,580 

While  their  assets  were 39,096,900 


£5,202,320 

Exclusive  of  the  permanent  debt  due  from  government  to  the  bank  of 
£14,686,800,  re-payable  on  the  expiration  of  the  charter. 

The  act,  known  so  well  as  Mr.  Peel's  currency  bill,  passed  in  1819, 
and  was,  parhaps,  one  of  the  most  important  of  the  kind  which  ever  met 
the  sanction  of  both  houses  of  legislature. 

A  remarkable  feature  in  its  history  is  to  be  found  in  a  petition  from 
the  merchants  of  the  city  of  London,  presented  by  the  late  Sir  Robert 
Peel,  against  the  measure  proposed  by  his  son.  After  stating  that  his 
petitioners  were  the  best  calculated  to  judge  on  so  important  a  point,  and 
that  a  meeting,  which  he  had  attended  for  this  purpose,  was  composed  of 
the  very  men  who  liad  so  nobly  supported  the  government  in  1797,  he 
proceeded  to  say,  in  language  as  feeling  as  the  subject  was  interesting, 
that  "  he  well  remembered  when  that  near  and  dear  relation  was  only  a 
child,  he  observed  to  some  friends  who  were  standing  near  him,  that 
the  man  who  discharged  his  duty  to  his  country  in  the  manner  which 
Mr.  Pitt  did,  did  most  to  be  admired,  and  was  most  to  be  imitated ;  , 
and  he  thought,  at  that  moment,  if  his  own  life  and  that  of  his  dear  re- 
lation should  be  spared,  he  would  one  day  present  him  to  his  country  to 
follow  in  the  same  path.  lie  was  well  satisfied  that  the  head  and  heart  of 
that  relation  were  in  their  right  places  ;  and  that  though  he  had  deviated 
a  little  from  the  path  of  propriety  in  this  instance,  he  would  soon  be  re- 
stored to  it." 

When  Mr.  Peel  introduced  this  currency*  act  to  the  house,  it  was 
with  one  of  those  elaborate  speeches  for  which  his  name  is  distinguished. 
After  an  elegant  and  powerful  tribute  to  Mr.  Horner,  he  proceeded  to 
state  that  the  house  must  now  resolve  whether  the  old  metallic  standard 
should  be  restored  or  not,  and  he  thought  it  impossible  that  any  consid- 
erate man  could  hesitate  on  that  question.  One  witness  only  had  been  an 
advocate  for  the  indefinite  suspension  of  cash  payments,  and  had  stated 
that  the  pound  should  be  the  standard  of  value.  When  required  to  de- 
fine what  he  meant  by  the  pound,  his  answer  was,  "  I  find  it  difficult  to 
explain  it ;  but  every  gentleman  in  England  knows  it;  it  is  something 
that  has  existed,  without  variation,  in  this  country  for  eight  hundred 
years."  Mr.  Locke  could  not  define  what  he  meant  by  an  abstract 
pound.  Sir  Isaac  Newton  came  to  the  doctrine  that  the  true  standard 
of  value  consisted  in  a  certain  quantity  of  gold  bullion.  Every  sound 
writer  arrived  at  the  same  conclusion.  After  an  able  historical  exposition 
of  the  three  distinct  periods  of  difiiculties  which  had  stood  in  the  way  of 
the  restoration  of  the  standard  of  value,  and  a  graceful  allusion  to  the 
great  public  duty  imposed  upon  them,  from  which  he  would  not  shrink, 

*  Table  showing  the  amount  of  bank  notes  in  circulation  from  1792  to  1815,  with 
the  commercial  paj^er  under  discount  at  the  bank  during  the  same  period,  and  the 


Mr.  PeeVs  Currency  Act. 


169 


whatever  might  be  his  private  feelings,  he  proceeded  to  the  resolutions, 
which,  after  various  forms  and  modes  of  opposition,  Avere  passed. 

This  memorable  bill  provides  that,  from  the  1st  of  February  to  the  1st 
of  October,  the  bank  shall  deliver  on  demand  gold*  of  standard  fineness, 


gold  and  silver  annually  coined  at  the  bank,  with  the  exports,  imports  and  revenue 
for  the  same  period. 


£5  notes 
Tbaks.       i)i 

CircuVn. 

1792,  £11,807,380  . 

1793,  11,388,910  . 

1794,  10,744,020  . 

1795,  14,017,510  . 

1796,  10,729,520  . 

1797,  9,674.780  . 

1798,  11,647,610  . 

1799,  11,494,150  . 

1800,  15,372,980  . 

1801,  13,578,520  . 

1802,  12,574,860  . 

1803,  12,850,970  . 

1804,  12,546,560  . 

1805,  13,011,010  . 

1806,  13,271,529  . 

1807,  12,840,790  . 

1808,  14,093,690  . 

1809,  14,241,360  . 

1810,  15,159,180  . 

1811,  16  246,180  . 

1812,  15,951,290  . 


Under  £5. 


£867,585 
1,448,220 
1,465,650 
1,471,540 
2,634,760 
2,612,020 
2,968,900 
4,581,270 
4,860,160 
4,458,600 
4,109,890 
4,695,170 
4,801,500 
5,860,420 
7,114,090 
7,457,030 


Total  of 
Xotes. 

.£11,307,880  , 

.  11,388,910  . 

.  10,744,020  . 

.  14,017,510  . 

.  16,729,520  . 

.  11,114,120  , 

.  13,095,830  . 

.  12,959,010  , 

.  16,854,800  , 

.  16,203,280 

.  15,186,880 

.  15,849,980  . 

.  17,077,830 

.  17,871,170  , 

.  17,730,120 

.  16,950,680  . 

.  14,183,860  . 

.  18,542,860  . 

.  21,019,600  . 

.  23,360,220  , 

.  23,408,320  . 


Commercial 
Paper 

rendered  at 
Bank. 


£2,946,500 

3,505,000 

5,350,000 

4,490,000 

5,403,900 

6,401,900 

7,905,100 

7,523,300 

10,747600 

9,982,400 

11,865,500 

12,380,100 

13,484,000 

12,950,100 

15,475,700 

20,070,600 

14,355,400^ 

14,291,600* 


1813,    15,407,320..   7,713,610..   23,210,930..   12,330,200 


1814,  16,455,540 

1815,  18,226,400 

1816,  18,021,220 


8,345,540 
9,085,250 
9,001,400 


24,801,080  . 
27,261,650 
27,013,620  . 


13,285,800 
14,917,100 
11,416,400 


Official 
value  Im- 
portsfrom 
(pt  Britain. 
..£19,659,358 
..  19,659,857 
..  22,294,893 
..  23,736,889 
..  23,187,319 
. .  21,013,956 
. .  25,122,203 
..  24,066,700 
. .  28,257,781 
..  30,435,268 
..  28,308,378 
..  25,104,541 
..  26,454,281 
..  27,341,720 
..  25,504,478 
..  23,326,845 
..  25,660,953 
, .  30,170,292  , 
..  37,613,294 
..  25,240,704 
. .  24,923,922 
Eecords 
. .   destroyed 

by  fire. 
. .   32,622,771 
..    31,822,053 
..    26,374,921 


Official 
'calue  Ex- 
ports from 
.  GH  Britain. 
..£24,904,850  . 
. .  20,390,179  . 
. .  26,748,082  . 
. .  27,123,388  . 
. .  30,518,918  . 
..  28,917,010  . 
..  27,317,087  . 
. .  29,556,637  . 
. .  83,381,617  . 
. .  34,888,504  . 
..  37,878,324  . 
. .  28,075,239  . 
..  31,071,108  . 
..  30,540,491  . 
..  32,984,101  . 
. .  30,588.084  . 
. .  29,956,629  . 
..  45,667,216  . 
. .  42,656,843  . 
. .  37,837,252  . 
. .    27,982,977  . 


51,358,398 
57,420,437 
48,216,186 


Revenue. 

.£17,864,464 

,  17,707,988 

.  17,899,294 

.  18,456,298 

.  18,548,628 

.  19,852,646 

.  30,492,995 

.  85,811,018 

.  34,009,457 

.  35,516,351 

.  87,111,620 

,  88,208,987 

.  45,515,152 

.  50,555,190 

.  54,071,908 

.  59,406,731 

.  02,147,601 

,  63,879,802 

.  67,825,597 

.  65,309,100 

.  65,752,125 

.  68,802,860 

.  70,240,813 

.  72,203,142 

.  62,640,711 


— Pari.  Deb.,  vii.,  xiv.,  xv. ;  App.  Pari.  Hist.,  xxxv.,  1563.  Colquuoun,  99.  Mo- 
REAu's  Tables,  and  Perier,  278.     Marshall's  Digest,  pp.  97,  147,  236. 

Thus,  in  the  twenty -four  years,  from  1792  to  1816,  the  circulation  of  England,  in- 
cluding the  large  and  small  notes  and  commercial  paper  discounted  at  the  bank, 
was  more  than  tripled;  the  revenue  tripled,  and  the  exports  more  than  doubled ; 
the  imports  increased  a  half.  The  increase  of  commercial  paper  from  1792  to  1810 
was  sevenfold ;  indicating,  perhaps,  the  greatest  and  most  rapid  rise  in  mercantile 
transactions  in  the  whole  history  of  the  world. 

*  A  bank  note  is  a  promise  to  pay  on  demand  a  certain  quantity  of  gold  and  sil- 
ver ;  and,  as  it  has  no  intrinsic  value,  its  whole  value  depends  on  the  belief  given  to 
this  promise.  The  quantity  of  gold  and  silver  for  which  it  is  a  promise  is  the  stan- 
dard of  its  value  ;  and,  when  it  deviates  from  this  standard — when  it  is  not  worth 
the  quantitj^  of  gold  and  silver  for  which  it  is  a  promise — it  may  be  fairly  said,  from 
whatever  caiise,  to  be  depreciated,  or  to  have  experienced  a  loss  of  value.  The 
standard  price  of  gold  bullion  in  this  country  is  £3  17s.  lOid.  an  ounce.  Four  one 
pound  bank  notes,  therefore,  contain  so  many  promises  to  pay  something  more  than 
an  ounce  of  bullion;  and,  when  bullion  is  sold  for  paper  at  £4  10s.,  £5  and  £5  lOs. 
per  ounce,  it  is  clear  that  the  paper  is  not  of  the  same  value  as  the  gold  for  which 
it  is  a  promise;  in  other  words,  that  it  is  depreciated. — Edinb.  Review,  Feb.,  1816, 
p.  149. 


IVO  History  of  the  Bank  of  England. 

not  less  than  sixty  ounces,  in  exchange  for  bank  notes,  at  £4  Is.  per  oz. 
From  the  1st  of  October,  1820,  to  the  1st  of  October,  1821,  the  same  plan 
to  be  adopted  ;  but  the  gold  to  be  at  the  rate  of  £3  19s.  6d.  per  ounce. 
From  the  1st  of  May,  1821,  to  the  1st  of  May,  1823,  the  mint  price  of 
gold  of  £3  l7s.  lO^d.  per  ounce  to  be  the  rate,  with  the  adoption  of  the 
same  plan;  and  from  the  1st  of  May,  1823,  the  notes  to  be  paid  in  the 
gold  coin  of  the  empire,  if  required.  Between  the  1st  of  February  and 
the  1st  of  October,  1820,  the  bank  were  empowered  to  deliver  gold  at 
any  rate  between  £4  Is.  and  £3  19s.  Cd.  per  ounce  ;  and  from  the  1st  of 
October,  1820,  to  May  the  1st,  1821,  they  were  also  allowed  to  do  the 
same  at  any  rate  between  £3  19s.  6d.  and  £3  l7s.  10|-d.,  in  ingots  or 
bars  of  gold  weighing  sixty  ounces.  They  were  permitted,  also,  the  op- 
tion of  paying  in  specie  on  or  after  the  1st  of  May,  1822.  By  the  same 
act  the  laws  Avhich  restrained  the  exportation  of  gold  and  silver  coin,  or 
prohibited  it  from  being  melted,  were  repealed. 

This  bill  was  the  first  commencement  of  that  great  principle  enunci- 
ated by  Mr.  Peel,  that  the  national  bank  should  always  be  prepared  to 
pay  specie*  for  its  notes  on  demand,  a  principle  he  has  since  worked  out 
in  the  last  bank  charter.  Mr.  Peel's  act,  says  one  writer,  was  passed 
amid  general  acclamations.  Mr.  Canning  pronounced  the  question  to  be 
settled  forever.  Among  the  public,  various  opinions,  comprised  in  pam- 
phlets and  octavo  volumes,  were  disseminated.  Mr.  Tooke,  however, 
has,  perhaps,  paid  the  highest  compliment  to  the  bill  in  the  observation, 
that  had  it  not  been  for  the  derangement  of  our  currency,  occasioned  by 
the  large  financial  operations  of  the  continental  States,  in  1817  and  1818, 


*  Guineas,  it  is  well  known,  were  sold  at  24,  25  and  26s.  in  paper,  and  the  dis- 
count would  have  been  still  greater  if  the  sale  had  not  been  prohibited  under  severe 
penalties.  Although  Parliament  had  just  voted  that  the  paper  had  lost  none  of  its 
original  value,  it  was,  nevertheless,  found  necessary  to  pass  a  law  to  prevent  its  be- 
ing sold  under  this  value.  On  the  continent  there  was,  of  course,  no  law  to  restrain 
the  sale  of  Bank  of  England  notes  at  tlieir  market  price ;  and  in  Rotterdam,  Ham- 
burgh and  other  places  they  were  accordingly  sold,  after  the  conclusion  of  the 
peace,  in  1814,  at  13,  14  and  \?,^.—Edinh.  Review,  Feb.,  1816,  pp.  149-150. 

The  social  condition  of  England  and  its  general  jDrosperity  were  much  improved 
in  the  year  1818.  The  change  had  begun  in  the  middle  of  the  preceding  year,  and 
arose  chiefly  from  prices  of  agricultural  produce  having  so  much  risen,  and  the  home 
market  for  our  manufactures  having  in  consequence  so  much  improved,  from  the  in- 
creased ability  of  the  rural  population  to  purchase  them.  The  funds,  that  sure  test 
of  public  prosperity,  rose  SO  per  cent. ;  in  1817,  the  three  per  cents  ascended  from 
62  in  January,  18'l7,  to  83  in  December  of  the  same  year.  The  bankruptcies  in 
England,  which,  in  February,  1816,  were  209,  were  reduced  in  September  to  61. 
The  total  was  1,575  in  the  year;  being  a  decrease  of  454  from  the  preceding  year, 
when  they  had  been  2,029.  These  unmistakable  symptoms  of  general  amelioration 
continued  throughout  1818.  The  funds  maintained  the  level  they  had  reached  on 
the  close  of  the  preceding  year;  and  the  bankruptcies  were  519  less:  they  sank  to 
1,056,  being  only  half  of  what  they  had  been  in  the  year  1816. 

Teaes.                      Banlc  of  EnglandNotes.  Country  Banks.  Total. 

1814, £24,801,080         ..  £22,700,000  ..  £47,501,080 

1815, 27,261,650         ..             19,011,000  ..  46,272,650 

1816, 27,013,620          ..              15,096,000  ■    ..  42,109,620 

1817, 27,397,900         ..              15,894,000  ..  43,291,900 

1818, 27,771,070         ..             20,507,000  ..  48,278,070 

— Alison's  Europe,  vol.  5,  p.  109. 


Mr.  PeeVs  Currency  Act.  171 

in  which  loans  were  raised  to  the  amount  of  £38,600,000,  the  renewal  of 
cash  payments  in  this  country  would  have  taken  place,  as  a  matter  of 
course,  in  1818.  These  words  prove  that  Mr.  Peel,  with  that  remarka- 
ble power  which  distinguishes  him,  of  comprehending  and  replying  to 
the  demands  of  the  time,  had  chosen  the  proper  period  for  the  resump- 
tion ;  while,  by  the  gradual  tone  of  the  bill,  he  prevented  any  sudden, 
and,  perhaps,  mischievous*  return  to  specie  payments. 

On  the  22d  of  January,  1819,  a  committee,  appointed  to  inquire  into 
the  mode  of  preventing  the  forgery  of  bank  notes,  made  their  report,  in 
which  they  stated  that  the  directors  had  furnished  them  with  a  detailed 
account  of  one  hundred  and  eight  projects,  regularly  classed  and  arranged, 
together  with  the  correspondence  concerning  them,  a  statement  of  the 
trials  to  which  they  had  been  subjected,  and  specimens  of  the  proposed 
originals,  and  of  the  imitations  executed  by  order  of  the  bank.  They 
had  also  received  and  answered  communications  from  seventy  individuals, 
and  in  some  cases  held  a  personal  interview  Avith  them.  They  had  ex- 
amined forged  notes  of  various  kinds,  and  the  tools  and  instruments  of 
one  forger  which  were  taken  upon  him  ;  and  that  from  the  capital  and 
skill  employed  in  carrying  out  the  crime,  there  must  always  be  a  liability 
of  imitation.     "One  plan,"  they  concluded  by  saying,  "has  been,  with 

*  In  every  country  the  aggregate  value  of  the  currency  must  evidently  depend  on 
the  business  which  it  has  to  perform  ;  and  as  an  increase  of  business,  without  any 
increase  of  currency,  will  proportionally  raise  its  value,  an  increase  of  currency, 
without  any  increase  in  the  business  which  it  has  to  perform,  must  have  an  effect 
precisely  the  reverse.  If  any  individual,  for  example,  purchase  a  house,  or  any 
other  article,  for  £1,000,  it  is  impossible  that,  in  paying  the  mone}',  he  can  employ 
more  or  less  than  this  exact  sum  ;  and,  as  the  great  mass  of  the  national  business  is 
made  up  of  individual  transactions,  it  is  clear  that,  if  neither  less  nor  more  than  a 
certain  sum  can  be  employed  in  settling  each  particular  transaction,  a  certain  sum, 
and  neither  more  nor  less,  must  also  be  employed  in  settling  the  wliole.  In  these 
circumstances,  if  we  supjiose  the  currency  to  be  suddenly  doubled  in  its  amount,  the 
effect  of  this  sudden  increase  must  evidentlj^  be  to  lower  the  value  of  each  particular 
piece  or  note  precisely  one-half;  for,  by  what  other  process  can  the  additional  quan- 
tity be  possibly  introduced  into  circulation  ?  It  is  very  immaterial  whether  the 
transactions  of  a  country  be  carried  on  with  ten,  twenty,  or  thirty  millions  of  notes 
or  guineas ;  as  the  aggregate  value  of  each  of  these  different  nominal  sums  will  de- 
pend on  the  business  which  they  have  to  perform. — Edinb.  Rev.,  Feb.,  1816,  p.  147. 

"  As  paper  may  with  ease  be  issued  to  any  extent,  either  by  government  or  pri- 
vate establishments  authorized  to  circulate  it,  it  becomes  an  engine  of  as  great  dan- 
ger, and  attended  with  as  destructive  effects,  ichen  it  is  unduly  multijjlied,  as  when  it 
is  unduly  contracted.  It  is  like  the  blood  in  the  human  body,  whose  circulation  sus- 
tains, and  is  essential  to,'  animal  life  ;  drained  away,  or  not  adequately  fed,  it  leads 
to  death  by  atrophy  ;  unduly  increased,  it  proves  fatal  by  inducing  apoplexy.  To 
preserve  'a  proper  medium,  and  promote  the  circulation  equally  and  healthfully 
through  all  parts  of  the  system,  is  the  great  object  of  regimen,  alike  in  the  natural 
frame  and  the  body  pohtic.  Issued  in  overwhelming  quantities,  as  it  was  in  France 
during  the  revolution,  it  induces  such  a  rise  in  prices  as  destroys  all  realized  capital, 
by  permitting  it  to  be  discharged  by  a  mere  fraction  of  its  real  amount ;  contracted 
to  an  excessive  degree,  either  by  the  mutations  of  commerce  or  the  policy  of  gov- 
ernment, it  proves  equally  fatal  to  industry,  by  lowering  the  money  price  of  its 
produce,  and  augmenting  the  weight  of  the  debts  and  taxes  with  which  it  is  op- 
pressed."— Alison's  Europe,  vol.  5,  p.  S'iY. 

Mr.  Alison  does  not  uniformly  commend  the  principle  of  a  substantial  currency, 
but  condemns  the  stringent  measures  which  were  essential  to  restore  the  currency 
and  to  discourage  wild  speculation. 


1*72  History  of  the  Bank  of  England. 

the  liberal  assistance  of  the  bank  directors,  for  some  time  past  in  a  course 
of  trial,  for  its  greater  perfection.  The  result,  if  our  expectations  be  not 
disappointed,  will  afford  a  specimen  of  great  ingenuity  in  the  fabric  of  the 
paper,  of  great  excellence  in  the  workmanship,  and  of  a  very  peculiar  in- 
vention and  difficult  machinery  in  the  art  of  printing."  The  following 
is  a  description,  from  a  contemporary  authority,  of  the  improved  note. 
A  number  of  squares  will  appear  in  chequer-work  upon  the  note,  filled 
with  hair  lines  in  elliptic  curves  of  various  degrees  of  eccentricity,  the 
squares  to  be  alternately  of  red  and  black  lines  ;  the  perfect  mathemati- 
cal coincidence  of  the  extremities  of  the  lines  of  diflferent  colors  on  the 
sides  of  the  squares  will  be  effected  by  the  arrangement  of  machinery  of 
singular  fidelity.  But  even  with  the  use  of  this  machinery,  a  person  who 
has  not  the  key  to  the  proper  disposition  would  make  millions  of  experi- 
ments to  no  purpose.  Other  obstacles  to'imitation  will  be  also  presented 
in  the  structure  of  the  note  ;  but  this  is  the  one  principally  relied  upon. 
It  is  plain  that  any  failure  in  the  imitation  will  be  manifest  to  the  obser- 
vation of  the  most  careless ;  and  the  most  skilful  merchants  who  have 
seen  the  operation  declare  that  the  note  cannot  be  imitated.  The  ma- 
chine works  Avith  three  cylinders,  and  the  impression  is  made  by  small 
convex  cylindrical  plates. 

In  1821,*  after  a  quarter  of  a  century,  the  bank  re-commenced  specie 


*  The  prominent  commercial  and  financial  events  of  the  previous  ten  years, 
(1811—1820,)  were  the  following: 

1811.  Charter  of  the  first  Bank  United  States  expired.  Three  new  banks  char- 
tered for  New-York  city.  English  guineas  publicly  sold  for  a  pound  note  and  seven 
shillings.  Mr.  Horner's  proposition  for  resumption  of  cash  payments  in  England 
rejected.  First  steamboat  built  at  Pittsburgh.  1812.  Serious  riots  in  the  manu- 
facturing districts  of  Lancashire  and  Yorkshire.  Declaration  of  war  by  the  United 
States  against  England,  18th  June.  First  successful  experiment  in  steam  naviga- 
tion on  the  Clyde.  1813.  Charter  of  the  East  India  Company  renewed  for  twenty 
years.  British  government  expenditures  for  the  year,  £120,000,000.  1814.  London 
Times  first  printed  by  steam,  20th  November.  The  first  savings  bank  established 
in  Edinburgh.  Peace  of  Ghent,  signed  December  24.  British  tax  on  notes  and 
bills  increased.  The  union  of  Sweden  and  Norway  effected.  Treaty  between  Hol- 
land and  England.  Cape  of  Good  Hope  finally  ceded  to  England.  1815.  Veto  of 
the  United  States  Bank  bill  by  President  Madison  ;  bank  re-chartered  for  twenty 
years.  Commercial  embarrassments  throughout  England — 1,285  bankrupts.  Eng- 
lish sovereigns  and  half-sovereigns  coined.  1816.  The  new  Russian  tariff  prohibit- 
ed the  importation  of  nearly  all  British  goods.  Bank  of  England  advanced 
£3,000,000  further  to  government,  making  a  total  of  £14,000,000.  1817.  New 
gold  coinage  of  England,  issued  February  3.  Partial  resumption  of  cash  payments 
by  the  Bank  of  England,  September  22.  Paris  first  lighted  by  gas.  First  steam- 
boat from  New-Orleans  to  Louisville.  1818.  Fii'st  Polar  expedition  of  Captain  John 
Franklin  left  England.  Steamboats  built  on  Lake  Erie.  First  regular  steamboat 
communication  between  Glasgow  and  Belfast,  established  by  Mr.  Napier.  1819. 
Commission  of  inquiry  for  checking  the  circulation  of  forged  notes,  February  15. 
Engraving  on  steel  introduced  by  Heath  <fe  Perkins.  First  passage  of  the  Atlantic 
by  steam.  Emigration  to  Cape  of  Good  Hope  encouraged  by  the  British  govern- 
ment. The  steamship  Savannah  arrived  at  Liverpool  from  the  United  States,  15th 
July.  Commencement  of  the  suspension  bridge  over  the  Menai  by  Telford.  The 
first  bank  in  Illinois  chartered.  1820.  Florida  ceded  to  the  United  States  by  Spain. 
Suspension  bridge  over  the  Tweed.  First  steamer  ascended  the  Arkansas  River. 
Forged  notes  extensively  in  circulation  La  England.  Commercial  panic  in  Ireland ; 
twenty  banks  stop  payment. 


Resumption  of  Cash  Paijments,  173 

payments.  The  currency  bill  of  Mr.  Peel  allowed  tliem  the  option  of 
paying  in  gold  coin  on  and  after  the  1st  of  May,  1822.  Anxious,  how- 
ever, to  meet  the  spirit  of  the  act,  which  required  a  return  to  a  metallic 
currency*  whenever  it  should  be  safe  to  all  interests,  the  directors  com- 
menced paying  on  the  1st  of  May,  1821.  Of  the  beautiful  coin,  so  well 
known  as  the  sovereign,  which  was  produced  in  1817,  9,971,364  were 
issued  during  the  ensuing  year. 


*  On  the  occasion  of  a  movement  in  1818  for  resumption  of  payments,  Mr.  Hus- 
KissoN  used  these  expressions,  which  subsequent  events  have  rendered  prophetic: 
"The  facility  enjoyed  by  Great  Britain  of  extending  her  paper  circulation,  has  had 
the  like  effect  that  had  been  found  to  arise  from  the  discovery  of  the  mines  of 
America ;  for  by  increasing  the  circulating  medium  over  the  world  to  the  extent  of 
forty  millions,  it  proportionally  facilitated  the  means  of  barter,  and  gave  a  stimulus 
to  industry.  In  proportion,  however,  as  the  bank  found  it  necessary  to  purchase 
gold  on  the  continent  to  meet  its  engagements  with  the  public  at  home,  the  circu- 
lating medium  of  the  continent  was  diminished,  and  as  the  continental  States  did 
not  enjoy  the  credit  possessed  by  this  country',  and  were  thereby  debarred  from 
increasing  their  paper  circulation,  the  result  was  discernible  in  the  great  confusion 
and  deterioration  of  property  that  had  taken  place  on  the  continent  during  the  last 
two  years.  Indeed,  he  had  no  hesitation  in  saying,  that  much  of  the  distress  that 
had  prevailed  upon  the  continent  was  fairly  attributabk  to  the  purchase  of  bullion 
by  the  Bank  of  England.  The  increase  of  the  circulating  medium  of  this  country 
has  given  a  great  stimulus  to  its  arts  and  industry.  It  was  only  to  be  lamented 
that,  while  the  general  appearance  of  the  country  had  so  much  improved,  the  com- 
forts and  rewards  of  the  laborers  had  been  much  reduced." 

The  grand  debate  on  the  final  measure  came  on  on  May  21,  1819,  and  preparatory 
to  it  two  petitions  were  presented  to  the  House  of  Commons,  one  from  the  directors 
of  the  Bank  of  England,  and  another  from  the  merchants  and  bankers  of  the  city  of 
London,  in  which  the  eflfects  of  the  proposed  measure  are  foretold  with  a  clearness, 
and,  as  the  event  has  proved,  a  truth,  which  render  them  among  the  most  valuable 
and  instructive  documents  recorded  in  history.  That  from  the  bank  directors,  with 
great  propriety,  disclaimed  any  interested  view  of  the  matter,  but  submitted  to  the 
legislature  what  must  be  the  effect  of  a  return  to  cash  payments  in  the  existing  finan- 
cial, commercial  and  monetary  state  of  the  country. 

The  petition  of  the  merchants  and  bankers  of  London  went  a  step  further,  and 
prophesied  the  consequences  of  the  proposed  measure  in  the  following  remarkable 
terms :  "  Your  petitioners  have  reason  to  apprehend  that  measures  are  in  contem- 
plation with  reference  to  the  resumption  of  cash  payments  by  the  Bank  of  England, 
which,  in  the  humble  opinion  of  your  petitioners,  will  tend  to  a  forced,  precipitate 
and  highly  injurious  contraction  of  the  ciirrency  of  the  country.  That  the  conse- 
quences of  such  a  contraction  will  be,  as  your  petitioners  humbly  conceive,  to  add 
to  the  burden  of  the  public  debt,  greatly  to  increase  the  pressure  of  the  taxes,  to 
lower  the  value  of  all  landed  and  commercial  property,  seriously  to  affect  and  em- 
barrass both  public  and  private  credit,  to  embarrass  and  reduce  all  the  operations  of 
agriculture,  manufactures  and  commerce,  and  to  throw  out  of  employment  (as  in  the 
calamitous  year  1816)  a  great  proportion  of  the  industrious  and  laboring  classes  of 
the  community.  That  your  petitioners  are  fortified  in  the  opinion  thus  expressed 
by  the  distresses  experienced  by  the  commercial,  trading,  manufacturing  and  agricul- 
tural interests  of  the  kingdom,  from  the  partial  reduction  of  the  bank  issues  which, 
it  appears,  has  recently  taken  place.  Neither  the  manner  nor  the  time  which  your 
petitioners  have  reason  to  apprehend  is  intended  to  be  proposed  for  the  resumption 
of  cash  payments,  is  suited  to  avoid  the  evils  they  anticipate.  The  petitioners, 
therefore,  humbly  crave  that  the  time,  as  at  present  fixed  by  law  for  the  termination 
of  the  restrictions  on  cash  payments  by  the  Bank  of  England,  may  be  extended  to 
a  period  which  shall  not  tend  to  a  forced  and  precipitate  contraction  of  the  circulat- 
ing medium  of  the  country,  or  to  embarrass  trade,  or  to  injure  public  credit,  agri- 
culture, manufactures  and  commerce." — Auson's  Europe,  vol.  5,  pp.  112 — 119. 
12 


174  History  of  the  Bank  of  Eagland. 

It  is  a  curious  fact  that,  a  few  weeks  before,  a  writer  who  possessed 
considerable  weight  with  the  public,  confidently  affirmed,  that  the  carry- 
ing out  of  the  measure  which  prescribed  the  bank  to  pay  the  bullion  at 
mint  prices,  on  the  1st  of  May,  1822,  would  be  attended  with  most  un- 
fortunate circumstances  to  the  country.  His  assertion,  for  the  fulfilment 
of  which  he  off'ered  to  stake  his  life,  had  not  long  been  made  known, 
when  the  bank  came  forward,  begging  that  they  might  be  permitted  to 
anticipate  by  a  year  the  term  fixed  on  for  their  payment  in  coin. 

When  this  subject  was  mooted  in  the  house,  Mr.  Baking  proposed  the 
establishment  of  a  double  standard,  to  consist  of  gold  and  silver.  He 
also  condemned  the  committee  appointed  to  inquire  into  the  question  of 
forgery,  who  had  failed  because  they  had  entertained  an  overweening 
solicitude  to  discover  something  absolutely  perfect. 

A  singular  and  very  intricate  fraud  was  discovered  this  year.  The  per- 
petrator was  William  Swiney  Barnard  Turner,  one  of  the  clerks  in 
the  service  of  the  corporation.  It  is  painful  to  record  internal  treachery ; 
but  it  has,  at  least,  been  some  gratification  to  the  writer,  that  such  in- 
stances have  not  often  presented  themselves.  It  was  the  duty  of  Turner 
to  post,  on  a  certain  day,  £4,795  15s,  in  the  navy  five  per  cents,  to  the 
account  of  Sir  Robert  Peel.  In  place  of  this,  he  gave  him  credit  to 
the  extent  of  £14,795  15s.,  thus  increasing  the  amount  due  to  Sir  Rob- 
ert by  £10,000.  Having  secured  the  foundation  of  the  object  which 
he  had  in  view,  the  next  movement  was  to  dispose  of  the  amount  which  , 
he  had  thus  created  by  a  single  stroke  of  his  pen.  The  second  step  was 
effected  with  almost  as  much  facility  as  the  first,  by  opening  an  account 
in  the  fictitious  name  of  J.  Penn,  of  Highgate,  whom  he  credited  to  the 
amount  of  £10,000.  A  purchaser  was  found,  the  stock  appeared  to  the 
credit  of  the  seller,  and  the  transfer  was  eftected. 

The  fraud  was  found  out  by  the  accidental  discovery  that  a  leaf 
had  disappeared  from  the  transfer  book ;  and  that  it  was  not  accidental 
was  proved  from  the  circumstance  that  the  paging  of  the  leaves  was 
altered,  in  order  that  they  might  be  consecutive.  Various  circum- 
stances pointed  to  the  probability  that  Turner  was  the  culprit ;  and 
he  was  taken  before  the  directors,  in  the  bank  parlor,  where  he  under- 
went an  examination.  The  result  Avas  a  confirmation  of  the  suspicion ; 
and  FoY,  the  officer,  was  directed  to  detain  him  till  the  next  day.  From 
the  respectability  of  Turner,  and  from  the  confidence  which  had  previ- 
ously existed  in  his  integrity,  Foy  was  permitted  to  take  his  prisoner  to 
any  place  which  he  thought  might  be  most  convenient,  and  where  as  lit- 
tle abridgment  of  his  comforts  might  take  place  as  possible.  With  this 
permission  he  was  taken  to  an  inn  in  the  neighborhood,  in  a  bed-room  of 
which  he  was  secured.  About  one  o'clock  in  the  morning,  as  the  watch- 
man proceeded  on  his  rounds,  he  was  suddenly  startled  by  the  sound  of 
breaking  glass,  and  looking  up,  saw  a  figure  suspended  from  the  third 
floor  window,  which  the  next  moment  fell  heavily  to  the  ground.  The 
unfortunate  adventurer  proved  to  be  Turner,  who  had  thus  attempted  to 
make  his  escape.  In  a  most  deplorable  condition  he  was  removed  to  the 
hospital;  and,  on  the  18th  of  September  following,  supported  on  crutches, 
he  appeared  to  take  his  trial. 

Out  of  fifteen  notes  received  for  the  forgery,  twelve  had  been  traced  to. 


The  Dead  Weight.  175 

Turner.  Great  difficulty  In  bringing  the  crime  home  was  occasioned  by 
the  fact  that  he  had  destroyed  many  evidences  of  his  guilt.  On  the  trial, 
as  the  only  witness  who  was  disposed  to  swear  decidedly  to  the  writing 
of  the  prisoner  was  answering  the  questions  put  to  him,  Turner  whis- 
pered to  his  counsel,  who  immediately  said,  "  Do  you  believe  the  New 
Testament  to  be  a  revelation  from  God  ?"  The  witness  hesitated,  and 
the  question  was  repeated.  "  Yes,  I  do,"  was  the  reply,  uttered  in  a  faint 
tone.  He  was,  however,  again  pressed  ;  and  evidence  being  produced  to 
prove  that  he  had  frequently  avoAved  his  disbelief,  he  was  at  last  compel- 
led to  acknowledge  it.  The  prisoner's  fate  was  greatly  decided  by  this, 
and  the  jury  returned  a  verdict  of  "  not  guilty."  With  the  money  thus 
disgracefully  obtained  Turner  went  to  Italy,  and  resided  for  some  time 
on  the  banks  of  the  beautiful  lake  of  Como.  He  soon  dissipated  his 
property  and  returned  to  England  ;  nor  was  it  long  before  he  was  found, 
early  in  the  morning,  behind  the  tables  of  the  Bank  of  England,  exam- 
ining some  books  which  were  exposed.  His  object  was  never  known  ; 
but  it  is  presumed  it  was  to  assist  him  in  some  further  fraud.  A  retribu- 
tive justice  overtook  him,  as  it  overtakes  all  who  depart  from  the  path  of 
rectitude,  and  he  died  in  an  obscure  street  in  London,  in  great  distress. 

"  The  bank  directors,"  says  a  periodical  writer,  "  have  adopted  a  reso- 
lution likely  to  be  of  essential  service.  They  have  fixed  their  interest  at 
four  per  cent.  The  eftect  will  be  to  produce  an  extensive  alleviation 
upon  all  persons  having  charges  upon  their  landed  estates  hitherto  pay- 
ing five  per  cent.  Ten  thousand  pounds  is  the  minimum  of  any  applica- 
tion to  be  entertained,  but  the  extent  of  accommodation  is  unlimited,  pro- 
vided the  rental  of  the  estate  is  double  the  amount  of  interest  at  four 
per  cent."  An  extension  of  the  time  of  such  bills  as  were  discounted 
was  also  allowed,  from  sixty-one  to  ninety-five  days.  The  effect  on  pub- 
lic securities  was  very  soon  seen,  as  consols  immediately  rose. 

The  purchase  of  the  dead  weight  has  been  variously  commented  upon, 
Mr.  Lloyd  believing  that  both  for  the  bank  and  the  state  it  was  an  inju- 
dicious arrangement,  while  Mr.  Ward  termed  it  "  the  best  undertaking  in 
which  the  bank  could  have  been  engaged."  With  regard  to  the  negotia- 
ble character  of  the  security,  Mr.  Norman  considered  it  was  equal  to  ex- 
chequer bills,  with  the  simple  difference  of  the  one  being  a  debt  to  be 
repaid,  and  the  other  an  annuity  for  a  given  term.  The  following  is 
copied  from  Mr.  McCullocii's  "  Dictionary  of  Commerce,"  to  enable  the 
reader  to  form  a  clear  and  comprehensive  view  of  the  transaction  : 

"  At  the  end  of  the  war  the  naval  and  military  pensions,  superannuated 
allowances,  «fcc.,  all  included  under  the  term  dead  weight,  amounted  to 
about  £500,000  a  year.  They  would  of  course  have  been  gradually  les- 
sened, and  ultimately  extinguished,  by  the  death  of  the  parties.  But  it 
was  resolved,  in  1822,  to  attempt  to  spread  the  burden  over  the  w^hole 
period  of  forty-five  years,  during  which  it  was  calculated  the  annuities 
would  continue  to  decrease."     "  In  1823  the  bank  agreed,'*  on  condition 


*The  bill  of  1819,  which  re-established  cash  payments,  and  thereby  rendered  the 
national  currency,  with  the  exception  of  £14,000,000,  which  the  bank  was  author- 
ized to  issue  upon  securities  entirely  dependent  on  the  retention  of  the  precious 
metals  of  the  country,  was  brought  about  by  a  singular  but  not  unnatural  comhina- 


176  Historrj  of  the  Bank  of  England. 

of  receiving  an  annuity  of  £585,740  for  forty -four  years,  commencing  on 
the  5th  April,  1823,  to  pay  on  account  of  the  pensions,  &c.,  at  different 
specified  periods,  between  the  years  1823  and  1828,  both  inclusive,  the 
sum  of  £13,089,419." 

The  discontinuance  of  notes  under  £5  lessened,  to  an  important  extent, 
the  internal  business  of  the  corporation.  AVhen  the  £l  notes  were  first 
introduced  the  number  of  clerks  had  been  considerably  increased,  and  on 
their  abolition  it  was  found  necessary  to  part  with  a  considerable  num- 
ber. In  1822,  therefore,  many  of  them  left  the  establishment.  The 
liberality  of  the  directors  on  this  occasion,  who  gave  pensions  to  all,  in 
proportion  to  the  number  of  years  they  had  served,  "  was  highly  liberal, 
and  met  with  universal  approbation."  This  liberality  is  yet  remembered 
with  respectful  gratitude.  Tending,  as  such  conduct  unquestionably  does, 
to  create  a  beneficial  union  of  interests  between  the  employer  and  the 
employed,  it  is  pleasant  to  be  able  to  record  the  consideration  of  the  one 
and  the  kindly  remembrance  of  the  other.  The  moral  claim  of  a  servant 
worn  out  with  years  or  work,  is  indisputable.  In  all  government  sit- 
uations in  Austria,  a  plan  is  adopted  by  which  the  employe,  when  certain 
stipulations  are  performed,  and  after  a  certain  period  of  service,  is  entitled 
to  claim  a  pension.  The  plan  adopted  is  simple,  and  might  be  advan- 
tageously introduced  into  England. 

In  1822,  the  ministry  proposed  to  the  bank  directors  that  they  should 
concede  their  exclusive  partnership  privileges  immediately,  in  all  parts  of 
the  kingdom,  sixty-five  miles  distant  from  London.  The  Earl  of  Liver- 
pool and  Mr.  Vansittart  entered  into  correspondence  with  the  governor; 
and  the  proposal  was  acceded  to  by  the  authorities  of  the  corporation, 
upon  the  condition  that  the  integrity  of  the  remainder  of  the  charter 
should  be  continued  for  ten  years  longer.  The  treaty  was,  however, 
abandoned.     The  country  bankers  remonstrated  strongly  ;  and  it  was  re- 

tion  of  causes.  In  the  first  place  there  was  the  natural  reaction  of  the  human  mind 
against  the  enormous  evils  which  had  arisen  in  France  from  the  abuse  of  the  system 
of  assignats,  the  quantities  of  which  issued  exceeded  at  one  time  £700,i'00,000  ster- 
ling, and  caused  such  a  rise  of  prices  as  swept  away  nearly  the  whole  realized  capi- 
tal of  tlie  country.  In  the  next  place,  there  was  the  natural  dread  on  the  part  of 
all  the  holders  of  realized  wealth  of  such  a  continued  elevation  of  prices  as  might 
lessen  the  exchangeable  value  of  their  fortunes,  and  in  some  degree  deprive  them  of 
their  inheritance  or  the  fruits  of  their  toil.  Thirdly,  the  whole  persons  engaged  in  man- 
iifactures — a  large  and  increasing  class — were  impressed  with  the  same  ideas,  from 
the  experience  which  the  opening  of  the  harbors  had  afforded  them,  since  the  peace, 
of  the  great  difference  between  the  money  wages  of  labor  and  prices  of  raw  material 
on  the  continent,  where  money  was  scarce  because  its  inhabitants  were  poor,  and 
England,  where  it  was  plentiful,  because  they  were  rich,  and  the  necessity  of  con- 
tracting the  currency  in  order  to  lower  prices,  especially  of  raw  material  and  labor, 
and  enable  them  better  to  compete  with  their  continental  rivals. — Auson's  Europe, 
\-ol.  5,  p.  325. 

The  continental  States,  during  1817  and  1818,  had  no  paper  adequate  to  sustain 
their  credit  during  the  scarcity  of  monej%  owing  to  the  immense  pressure  on  the 
money  market,  whereas  England  enjoyed  in  the  highest  degree  that  advantage.  The 
paper  circulation  of  Great  Britain  had  greatly  increased  during  the  drain  on  the 
precious  metals,  and  compensated  for  their  want,  and  in  the  last  of  these  years  had 
reached  £48,000,000  in  England  alone,  a  higher  amount  than  in  any  year  of  the 
war.  Hence  the  prosperitj'  in  this  country,  which  co-existed  with  the  most  serious 
pressure  and  distress  on  the  continent. — Ibid.,  vol.  5,  p.  327. 


New  Standard  of  Value.  Ill 

probated  in  the  house,  where  Mr.  Pascoe  Grenfell  presented  a  petition 
against  it.  To  the  extension  of  the  monopoly  beyond  1833,  he  stated 
that  he  had  the  greatest  possible  objection.  To  the  proposal  which 
tended  to  remove  the  restriction  on  the  number  of  partners  engaged  in 
country  banking,  he  entertained  a  yet  greater ;  and  after  the  conduct  of 
the  bank,  after  their  immense  profits,  which  amounted  to  twenty-five 
millions  in  twenty-five  years,  after  seven  per  cent,  was  divided,  it  was 
amazing  that  government  should  be  so  unwise  as  to  propose  a  renewal  of 
the  bank  charter.  Mr,  Manning  denied  that  the  gains  of  the  bank  were 
more  than  were  made  by  others.  The  Royal  Exchange  Assurance  had 
made  immense  additions  to  their  capital  in  consequence  of  their  profits, 
Mr.  RiCARDO  announced  that  he  would  oppose  it  to  the  utmost  of  his 
power.  If  a  paper  currency  were  required,  ministers  could  do  it  better 
without,  than  with  the  bank.  Under  these  circumstances,  the  ministry 
deemed  it  advisable  to  withdraw  the  negotiation,  as  there  appeared  but 
little  probablity  of  the  legislature  sanctioning  the  measure. 

In  the  same  year,  during  a  period  of  considerable  agricultural  distress, 
the  country  bankers  were  permitted  to  continue  the  issue  of  their  notes 
below  the  value  of  £5,  up  to  the  year  1833.  Only  six  votes  were  re- 
corded against  the  bill. 

On  the  11th  of  June,  1822,  Mr,  Western  attempted  to  make  an  in- 
road on  the  provisions  of  Mr.  Peel's  currency  bill.  He  "assumed,"  says 
the  Annual  Register,  "that  the  landholder  had  a  right  (we  suppose  a 
Divine  right)  to  enjoy  all  the  advantages,  and  be  protected  from  all  the 
inconveniences,  that  might  at  any  time  flow  from  fluctuations  in  the  cur- 
rency, and  took  for  granted  that  the  change  which  had  occurred  in  prices 
had  been  occasioned  solely  by  the  resumption  of  cash  payments  ;  with 
the  help  of  these'two  postulates,  he  easily  arrived  at  whatever  conclusion 
seemed  good  to  him."  Mr.  Huskisson  replied  that,  as  the  foundation  of 
his  plan,  he  asserted,  "  that  the  standard  of  value  in  every  country  should 
be  that  article  which  forms  the  constant  and  most  general  food*  of  its 
population."  It  followed  that  wheat  could  not  be  the  standard  in  Ireland. 
Potatoes  must  be  the  measure  of  value.  We  had  heard  of  fanciful 
standards  ;  the  ideal  unit ;  the  abstract  pound  sterling  ;  but  we  had  nev- 
er heard  before  of  a  potato  standard.  What  a  beautiful  simplicity  of 
system  ;  a  wheat  standard  for  one  part  of  the  empire,  a  potato  standard 
for  the  other.  The  proposition  was  for  a  depreciation  of  the  standard  of 
the  currency.     A  measure  reprobated  by  all  statesmen  and  all  historians, 

*  The  following  were  among  the  extraordinary  fluctuations  in  the  price  of  wheat, 
per  quarter,  payable  in  paper  as  compared  with  gold,  during  the  years  1809-1814. 
—M.  Rev.,  1816. 

When  Purchased  When  Purchased 

with  Paper.  with  Bullion. 

s.    d.  8.    d. 

1809, 95  7  1809, 810 

1810, 106  0  1810, 88  6 

1811, 94  0  1811, 74  0 

1812, 115  0  1812 90  0 

1813, 1110  1813, 74  0 

1814, 74  0  ....    1814 56  6 


lV8  Histonj  of  the  Bank  of  England. 

the  wretched  but  antiquated  resource  of  barbarous  ignorance  and  arbi- 
trary power,  the  last  mark  of  a  civilized  nation's  weakness  and  degrada- 
tion. If  such  a  proposition  should  be  entertained,  all  pecuniary  dealings 
would  be  at  an  end;  all  pending  transactions  would  be  thrown  into  disor- 
der ;  all  holders  of  paper  would  insist  upon  its  being  converted  into  coin. 
Neither  the  bank,  nor  the  London  bankers,  nor  the  country  banks,  could 
survive  the  shock. 

Mr.  RicARDo  maintained  that  the  inconveniences  of  the  return  to  a 
metallic  standard  had  been  infinitely  increased  by  the  bank  directors  in 
making  premature  purchases  of  gold  to  a  large  extent.  They  ought  not 
to  have  paid  in  specie  until  1823.  Mr.  Peel's  bill  was  in  truth  to  try 
whether  a  bank  could  not  be  advantageously  carried  on  upon  the  princi- 
ple of  paying  the  notes  in  bullion  ;  and  if  the  bank  had  gone  on  wisely 
in  their  preliminary  arrangements,  the  bullion  part  of  the  plan  would 
have  worked  for  a  number  of  years  beyond  the  time  originally  stipulated. 

Mr.  Peel  trusted  that  the  house  would  pause  before  they  adopted  a  pro- 
position which  would  reduce  the  value  of  one  pound  to  fourteen  shillings. 
The  effect  of  the  measure  would  be  to  disturb  all  mercantile  transactions. 
If  the  house  should  proceed  upon  the  principle  of  this  bill,  there  would 
be  an  end  for  ever  to  the  very  idea  of  national  fiiith  ;  that  faith  which 
had  supported  us  under  every  difficulty,  and  which  constituted  the  pride, 
the  glory  and  the  support  of  the  country.  The  measure  of  Mr.  Western 
was  lost  by  a  large  majority. 

A  sudden  and  unexpected  fall  in  bank  stock  of  sixteen  per  cent.,  pro- 
duced by  an  equally  unexpected  diminution  of  dividend,  occurred  in 
1823.*  The  customary  meeting  was  held  to  hear  the  rate  of  interest 
announced,  attended  by  the  usual  small  proportion  of  proprietors.  For 
many  years  they  had  heard  gratifying  statements,  s'ometimes  concluding 
tvith  an  increased  dividend,  and  sometimes  with  a  considerable  bonus. 
With  this  result  the  holders  of  stock  willingly  concurred,  applauded  the 
wisdom  of  the  direction,  passed  a  vote  of  thanks  to  them  for  their  united 
capacity,  and  went  home  happy  and  contented.  A  change,  however, 
occurred  this  year.  It  is  probable  that  the  return  to  a  metallic  currency 
was  one  cause  of  the  proposition  that  the  half-yearly  dividend  should  be 
reduced  from  five  to  four  per  cent.  For  this,  however,  the  meeting  were 
no  means  prepared ;  and  the  prospect  of  the  reduction  produced  some 
very  energetic  speeches.  All  were  quite  willing  to  allow  great  capacity 
to  the  directors  while  a  high  dividend  was  maintained  ;  but  no  sooner 
was  there  a  hint  of  lowering  it,  than  they  practically  evinced  their  doubts 
of  the  wisdom  of  that  body,  which  year  after  year  had  received  a  vote  of 
thanks.  A  counter  proposition  was  made  for  retaining  the  old  dividend, 
but  it  was  lost  by  a  large  majority.  The  suggestion  was  oflered  to  reduce 
it  only  half  per  cent.,  but  in  vain.  A  ballot  was  then  demanded,  and 
granted  on  the  demand  being  signed  by  nine  proprietors.  The  monetary 
portion  of  the  stockholders  are  generally  aware  of  the  importance  of  sup- 
porting the  direction.     At  this  period,  also,  the  affairs  of  the  corporationf 

*  The  lowest  price  this  year  was  204,  a  lower  point  than  had  been  reached  since 
1806,  but  in  1825,  1826,  went  to  193  @  196. 

f  The  effects  of  the  contraction  of  four  millions  of  the  currency,  made  the  subject 


Forgery  of  Fauntleroy.  179 

vFere  private,  and  it  was  far  from  judicious  to  oppose  those  who  were 
well  acquainted  with  the  accounts,  and  who  were  naturally  far  more 
pleased  to  declare  an  enlarged  rather  than  a  decreased  dividend.  But 
while  it  must  be  acknowledged  that  many  of  the  bank  stock  proprietors 
represent  the  wealth,  the  rank  and  the  intelligence  of  the  country,  it  must 
also  be  remembered  that  a  diminution  of  interest  of  two  per  cent,  per 
annum  might  cause  some  distress  to  the  small  holder,  by  its  occasioning 
him  to  reduce  his  expenditure ;  and  he  would,  therefore,  express  warmly 
what  he  felt  keenly.     Of  course,  the  directors  gained  their  point. 

Although  most  of  the  following  occurrences  are  familiar  to  all,  there 
are  some  portions  of  the  relation  sufficiently  novel  to  claim  the  perusal  of 
the  reader. 

The  father  of  Henry  Fauntleroy  was  originally  clerk  in  a  city  bank- 
ing-house, and  obtained  a  partnership  in  the  firm  of  Marsh,  Sibbald  & 
Co.,  in  1792,  from  his  knowledge  of  banking.  On  his  father's  death,  in 
1807,  Henry  Fauntleroy,  from  his  superiority  over  his  copartners  in 
banking  information,  was  chosen  to  occupy  the  same  position.  The  busi- 
ness, from  the  first,  was  unfortunate.  Two  years  after  its  establishment 
a  loss  was  sustained  of  £20,000  ;  and  at  the  early  age  of  twenty-two,  the 
subject  of  this  narrative  found,  to  use  his  own  words,  "that  the  whole 
weight  of  an  extensive,  but  needy,  banking  establishment  at  once  de- 
volved upon  him."  He  had  not  occupied  his  post  above  three  years, 
when  another  sudden  demand  of  £170,000  was  made  upon  the  house. 

Mr.  Fauntleroy  has  said  that  he  was  not  a  gambler ;  nor  was  he  in 
the  ordinary  acceptation  of  the  term.  But,  in  the  funds,  his  speculations 
were  considerable  ;  and  it  is  probable  that  his  losses  there  made  him  first 
alter,  as  he  was  nightly  in  the  habit  of  doing,  the  balances  of  the  house 
after  the  total  was  made  up.  It  is,  indeed,  hardly  credible,  that  he  should 
resort  to  forgery,  until  the  exhaustion  of  all  other  means.  Upwards  of 
£100,000  were  thus  withdrawn ;  and  the  fraud  was  so  artfully  concealed, 

of  boast  by  the  chancellor  of  the  exchequer,  were  thus  stated  by  Mr.  Baring  in  the 
debate  of  1821  :  "In  looking  at  this  question,  it  is  very  material  to  consider 
what  is  the  state  of  the  country  in  this,  the  sixth  year  of  peace.  Petitions  are  com- 
ing in  from  all  quarters  remonstrating  against  the  state  of  suffering  in  which  so 
many  classes  are  unhappily  involved,  and  none  more  than  the  agricultural  classes. 
When  such  is  the  state  of  the  country  in  the  sixth  year  of  peace,  and  when  all  the 
idle  stories  about  over-production  and  under-consumption,  and  such  like  trash,  have 
been  swept  away,  it  is  natural  to  inquire  into  the  state  of  a  country  placed  in  a 
situation  without  a  parallel  in  any  other  nation  or  time.  No  country  before  ever 
presented  the  continuance  of  so  extraordinary  a  spectacle  as  that  of  living  under  a 
progressive  increase  in  the  value  of  money,  and  decrease  in  the  value  of  the  produc- 
tions of  the  people." — Alison's  Europe,  vol.  5,  p.  354. 

The  budget  was  brought  forward  on  the  1st  July,  1822,  and  its  leading  feature 
was  the  reduction  of  the  sinking  fund  from  £13,000,000  to  £7,500,000,  by  appropri- 
ating £5,500,000  to  the  current  service  of  the  year.  This  signal  and  calamitous 
departure  from  the  form  even  of  our  former  po'licy,  in  this  vital  particular,  was 
sought  to  be  justified  by  the  chancellor  of  the  exchequer  on  various  grounds,  but  it 
was  evident  that  it  was  imposed  upon  him  by  sheer  necessity,  and  was  a  direct 
abandonment  of  the  solemn  resolution  to  maintain  a  real  surplus  of  £5,000,000  over 
the  expenditure,  which  Parliament  had  unanimously  adopted  only  three  years  be- 
fore ;  for,  as  the  nominal  sinking  fund  was  reduced  to  half  its  former  amount,  it  was 
plain  that  the  real  redemption  of  debt  was  virtually  abandoned. — Ibid.,  vol.  5,  p. 
307. 


180  History  of  the  Bank  of  England. 

that  it  required  the  utmost  keenness  of  the  accountant,  aware  as  he  was 
of  some  such  fact,  to  detect  the  imposition. 

About  1816  other  losses  occurred  ;  and  the  Bank  of  England,  undoubt- 
edly aware,  from  its  extensive  information,  of  the  slight  means  of  the 
house,  refused  to  discount  its  bills.  This  was  a  further  severe  blow.  In 
May,  1815,  a  power  of  attorney  was  presented  at  the  bank,  purporting  to 
bear  the  signature  of  Frances  Young,  of  Chichester,  for  the  sale  of 
£5,000  three  per  cent,  consols.  That  power  was  forged  ;  but  it  passed 
the  ordeal  of  the  bank  examinations,  and  the  money  was  procured.  From 
this  period  many  powers,  bearing  the  names  of  Marsh  &  Co.,  as  attorneys, 
were  acted  on  by  Mr.  Fauntleroy.  Most  of  these  were  attested  by  two 
of  the  clerks  of  the  banking-house.  Some  of  them  were  to  replace  stock 
previously  sold,  while  others  provided  funds  for  different  purposes.  No 
doubt  appears  to  have  been  excited  at  the  bank,  or  it  was  at  once  allayed 
by  the  fact,  that  the  power  was  given  to  a  banker,  and,  therefore,  genu- 
ine. From  1815  to  1823  large  sums  were  thus  obtained  ;  but  in  the  lat- 
ter year  the  supply  ceased.  Mr.  Fauntleroy  Avas  joint  trustee  in  an  ac- 
count with  some  other  gentlemen,  in  the  imperial  three  per  cents.  In 
the  management  of  the  trust  some  difficulties  arose  ;  and  the  only  plan 
which  could  save  the  executors  from  a  heavy  responsibility,  was  to  throw 
the  property  into  Chancery.  Mr.  Fauntleuoy  strenuously  objected.  In 
the  course  of  the  dispute,  one  of  the  co-trustees  visited  the  bank,  and 
learned  the  fearful  intelligence  which  first  led  to  the  discovery  of  a  series  ■ 
of  forgeries,  so  gigantic  in  their  extent,  and  so  unparalleled  in  their  na- 
ture, as  to  border  on  the  regions  of  fiction. 

The  information  was  communicated  to  the  bank  authorities.  Orders 
were  issued  for  the  examination  of  all  powers  granted  to  the  bouse  of 
Marsh,  Stracey  and  Co.,  and  the  result  may  be  anticipated. 

In  September,  1824,  Plank,  the  Bow-street  officer,  might  be  seen  pro- 
ceeding in  the  direction  of  the  banking-house  of  Marsh,  Stracey  &  Co. 
A  person  who  accompanied  him  entered  first,  and,  requesting  an  inter- 
view with  Mr.  Fauntleroy,  was  ushered  into  his  private  counting-house. 
Within  a  minute  he  was  followed  by  Plank.  The  interior  of  a  bank  is 
nearly  sacred ;  but  the  officer  pushed  boldly  by  the  clerk,  who  would 
have  interrupted  him,  merely  saying  he  wished  to  speak  with  Mr.  Faunt- 
leroy. On  entering,  he  closed  the  door,  announced  his  name,  and  pro- 
duced a  warrant  for  the  apprehension  of  Henry  Fauntleroy  on  a  charge 
of  forgery.  A  deadly  pallor  passed  over  the  face  of  the  latter;  he  was 
fearfully  agitated,  and  hurriedly  exclaimed,  "Good  God!  cannot  this 
business  be  settled  ?"  Plank  begged  him  to  make  no  noise,  but  to  walk 
out  quietly  for  a  few  minutes,  and  they  could  talk  about  it.  Mr.  Faunt- 
leroy then  signed  a  few  blank  checks  for  the  business  of  the  house,  with 
a  hand  so  unsteady  that  it  was  difficult  to  recognise  his  signature  ;  and 
said  he  should  go  out  for  a  few  minutes.  He  was  then  conducted  to  the 
private  residence  of  Mr.  Conant,  the  magistrate ;  and,  after  an  interview 
of  the  prisoner  with  one  of  his  clerks,  Mr.  Freshfield,  solicitor  to  the 
bank,  accompanied  by  Plank,  proceeded  to  the  banking-house  to  search 
the  papers. 

The  search  was  successful.  Documents  unparalleled  in  the  history  of 
crime  were  discovered.     In  a  private  room,  a  box,  bearing  no  name,  was 


Forgery  of  Fauntleroy.  181 

found.  What  must  the  surprise  of  the  bank  solicitor  have  been  to  find 
in  it  a  list,  in  the  prisoner's  handwriting,  of  forgeries  which  he  had  com- 
mitted, amounting  to  £l  12,000,  with  the  following  extraordinary  acknow- 
ledgment :  "  In  order  to  keep  up  the  credit  of  our  house,  I  have  forged 
powers  of  attorney,  and  have,  thereupon,  sold  out  all  these  sums,  without 
the  knowledge  of  any  of  my  partners.  I  have  given  credit  in  the  ac- 
counts for  the  interest  when  it  became  due.  Henry  Fauntleroy." 
These  words  followed  :  *'  The  bank  first  began  to  refuse  our  acceptances, 
and  thereby  destroy  the  credit  of  our  house.  The  bank  shall  smart  for 
it."  At  the  period  of  his  apprehension  he  had  a  power  of  attorney  by 
which  he  would  have  replaced  the  stock  that  produced  the  discovery. 

In  a  conference  the  forger  had  with  a  partner,  he  expressed  great 
anxiety  to  obtain  possession  of  a  "  blue  book."  Mr.  Graham  searched, 
and  brought  one  with  a  blue  sheet  for  a  cover.  "  No,  no,"  he  said,  "  this 
is  not  the  one  I  want.  It  is  a  bound  book."  Mr.  Graham  informed 
him  that  it  had  reached  the  hands  of  Mr.  Freshfield.  "  Then,"  said 
Fauntleroy,  "  I'm  a  dead  man.  I  could  have  set  the  bank  at  defi^ 
ance."  This  book  Avas  said  to  contain  an  account  of  the  forgeries  in 
which  he  had  been  engaged. 

The  crime  of  Mr.  Fauntleroy  excited  great  interest.  "  Hardly  any 
thing  else,''  says  one  writer,  "  was  talked  about."  The  newspapers 
teemed  with  anecdotes.  His  past  life  was  inquired  into.  His  portrait 
was  in  the  windows.  His  behavior  was  analyzed.  His  person  was  de- 
scribed. The  very  way  in  which  he  held  his  hat  was  repeated.  The 
magistrate  apologized  for  an  intrusion ;  and,  when  the  forger  heaved  a 
sigh,  the  scribe  was  ready  to  draw  the  attention  of  the  public  to  so  mem- 
orable a  fact.  The  whole  affiiir,  from  beginning  to  end,  was  a  bitter 
satire  upon  those  English  people  who  rest  the  importance  of  a  criminal 
on  the  magnitude  of  his  crime,  and  interest  themselves  in  exact  propor- 
tion to  the  respectability  of  the  oftender. 

The  human  mind  is  always  disposed  to  sympathize  with  great  crimi- 
nals ;  and  those  who  had  heard,  week  by  week,  of  executions  of  small 
people,  for  small  sums,  were  filled  with  horrc  at  the  position  in  which 
a  gentleman  was  involved,  and  evinced  a  most  misplaced  sympathy  at 
the  idea  of  hanging  a  banker.  The  loss  which  the  company  sustained 
from  this  wholesale  forger*  was  stated  by  the  governor  to  a  committee 
of  the  House  of  Commons  at  £360,000;  and  the  interest  alone,  which 
was  regularly  paid,  must  have  been  nine  or  ten  thousand  pounds  a  year. 
The  care  required  by  these  accounts,  and  the  constant  anxiety  weighing 
on  the  mind  of  Fauntleroy,  from  the  knowledge  of  his  perilous  posi- 
tion, were,  in  themselves,  a  punishment.  His  exertions  at  the  banking- 
house  were  extraordinary.  So  energetic  was  he  that  his  services  were 
noticed  as  being  equal  to  those  of  three  clerks ;  but  such  care  and  such 
energy  should  have  produced  better  fruit.  The  last  time  he  received 
from  the  bank  the  warrants  due  to  the  firm  was  the  day  on  which  Thur- 
TELL  and  Hunt  were- tried.  During  the  payment,  he  entered  into  con- 
versation on  the  crime  with  the  clerk  who  paid  him  ;  imagining  but  little 

*  In  1821  a  petition  of  a  tradesman  was  presented  to  Parliament,  who  had  in  qd» 
week  taken  twenty-five  forged  notes. 


182  History  of  the  Bank  of  England. 

that  within  a  year  the  same  judge  who  had  tried  them  would  try  him ; 
that  the  very  list  of  warrants  he  was  receiving  would  be  brought  in  evi- 
dence ;  and  that  the  clerk  with  whom  he  was  so  fomiliarly  conversing 
would  be  a  witness  against  him.  Before  the  debtors'  door  at  Newgate, 
and  amidst  a  vast  concourse  of  spectators,  the  unhappy  man  expiated  his 
crime.* 


*  In  England,  the  forgery  of  deeds,  <fec.,  or  giving  them  in  evidence,  was  made 
punishable  by  fine,  by  standing  in  the  pillory,  having  both  ears  cut  off,  the  nostrils 
elit  up  and  seared,  the  forfeiture  of  land,  and  perpetual  imprisonment. — 5  Elizabeth, 
1562.  Forgery  was  first  punished  by  death  in  1634.  Since  the  establishment  of 
paper  credit,  a  multitude  of  statutes  have  been  enacted.  Forging  letters  of  attor- 
ney, for  the  transfer  of  stock,  was  made  a  capital  felony  in  1722.  Mr.  Ward,  M.  P., 
a  man  of  large  wealth,  was  expelled  the  House  of  Commons,  for  forgery,  May  16th, 
1726,  and  was  consigned  to  the  pillory,  March  17th,  the  following  year.  The  value 
of  forged  notes  which  were  presented  at  the  bank  during  ten  years  from  January  1st, 
1801,  was  nominally  £101,661.  In  one  year  (1817)  the  bank  prosecuted  142  persons 
for  forgery,  or  the  uttering  of  forged  notes,  {see  Parliamentary  Returns.)  Statutes 
reducing  into  one  act  all  such  forgeries  as  shall  henceforth  be  punished  with  death, 
William  IV.,  1830.  The  punishment  of  forgery  with  death  ceased,  by  statute, 
August,  1832,  except  in  cases  of  forging  or  altering  wills  or  powers  of  attorney 
to  transfer  stock ;  but  these  cases  also  are  no  longer  punishable  by  death,  having 
been  reduced  to  transportable  offences  by  act  of  July  17th,  1837. 

Among  the  remarkable  executions  for  forgery  were  the  unfortunate  David  and 
Robert  Peereau,  brothers,  and  wine-merchants,  who  were  hung  at  Tyburn,  Janu-  . 
ary  17th,  1776.  The  Rev.  Dr.  Dodd  was  found  guilty  of  forging  a  bond,  in  the 
name  of  Lord  Chesterfield,  for  £4,200.  The  greatest  interest  was  made,  and  the 
highest  influence  was  exerted  to  save  him;  but,  when  the  case  came  before  the 
council,  the  minister  of  the  day  said  to  George  III.,  "If  your  majesty  pardon  Dr. 
Dodd,  you  will  have  murdered  the  Perreaus  ;"  and  he  was  hung,  accordingly,  June 
27th,  1777.  John  Hatfield,  a  heartless  impostor,  who  had  inveigled  "  Mary  of  But- 
termere,"  the  celebrated  beauty,  into  a  marriage  with  him,  was  hung  for  forgery 
at  Carlisle,  September  3,  1803.  Mr.  IIexry  Fadntleroy,  a  London  banker,  was 
hung  November  30,  1824.  Joseph  Huxtox,  a  Quaker  merchant,  suffered  death  De- 
cember 8th,  1828.  The  last  criminal  hung  for  forgery  at  the  Old  Bayley  was 
Thomas  Mayxard,  December  31st,  1829. 

"Mr.  Basil  Montagu  states  justly  that  mankind  are  less  deterred  from  crime  by 
calcuhation  of  consequences  than  by  involuntary  sjnnpathy  with  others,  and  by  the 
natural  sense  of  right  and  wi'ong.  The  first  has  little  influence,  except  in  conjunc- 
tion with  the  last,  and  it  may  be  well  that  it  is  so  ;  since,  if  all  sorts  of  arbitrary 
and  capricious  commands  were  of  absolute  force  and  validity  in  themselves,  unsec- 
onded  by  opinion  or  conscience,  there  would  be  no  end  of  'the  fantastic  tricks 
which  man,  dressed  in  a  little  brief  authority,  might  play  before  high  Heaven  to 
make  the  angels  weep.'  There  has  been  too  much  of  this  work  already ;  and  a  very 
little  of  the  same  spirit  in  future  will  be  more  than  is  wanted.  There  is  enough  of 
it  lurking  in  the  prejudices  and  vindictive  passions  of  men ;  and  it  need  not  be 
fomented  by  panders  and  sophists.  No  punishment,  we  believe,  will  in  the  end  be 
found  to  be  wise  or  humane,  or  just  or  effectual,  that  is  not  the  natural  reaction  of 
a  man's  own  conduct  on  his  own  head,  or  the  making  him  feel  in  his  own  person 
the  consequences  of  the  injury  he  has  meditated  against  others.  It  is  impossible  to 
force  this  sentiment,  in  the  individual  or  the  communitj',  up  to  the  same  degree  of 
horror  against  the  smallest  as  against  the  highest  crimes  by  a  positive  law." — Edin- 
burgh Review,  1826. 

"The  subject  of  forgery  and  the  punishment  therefor  was  fully  discussed  in  the 
JSdinburgh  Review,  vols.  31  and  52;  Fraser's  Magazine,  vol.  11 ;  Eclectic  Magazine, 
vol.  21,  p.  560;  Monthly  Rcvi'w,  vol.  1  ;  Blackwood's  Magazine,  vol.  69,  pp.  461,  605, 
and  in  LittelVs  Museum,  voL  36, 


Prosperity  of  the  Country.  183 


CHAPTER    XVII. 

PROSPERITY    OF    THE     COUNTRY REDUCTION     OF     INTEREST CIRCULATION    OF    ONE     POUND 

NOTES FOREIGN     LOANS EAGERNESS    TO    SUBSCRIBE HIGH     PRICE     OF     SHAKES DELU- 
SIVE    COMPANIES HISTORY     OF     THE     PERUVIAN     LOAN REMARKS     IN     THE     HOUSE     OF 

COMMONS. 

The  year  1823  witnessed  the  early  dawning  of  a  prosperity,*  which, 
regarded  as  solid  by  many,  ended  in  an  almost  national  ruin.  In  the 
previous  year,  with  a  view  of  reviving  speculation,  then  dormant,  the 
bank,  at  the  instance  of  the  State,  had  issued  about  four  millions  in  ad- 
vances to  the  government,  and  in  enlarged  discounts  ;  but,  in  Mr.  Horsley 
Palmer's  opinion,  the  first  step  towards  the  excitement  was  lowering  the 
interest  on  public  securities,  which  was  effected  in  1822,  by  reducing  the 
navy  five  per  cents  to  four  per  cent.,  and  a  smaller  stock  to  three  and  a 
half  per  cent.  This  reduction  in  the  interest  of  upwards  of  two  hundred 
millions  caused  some  distress  and  great  dissatisfaction.  To  meet  the  dis- 
sentients the  bank  advanced  five  millions,  to  be  repaid  in  quarterly  in- 
stalments. Many  persons  who  had  hitherto  been  contented  with  the  div- 
idend they  had  received,  were  compelled  either  to  reduce  their  expenses 
to  meet  a  diminished  revenue,  or  endeavor  to  obtain  a  larger  interest  than 
was  oflfered  by  government.  A  feverish  feeling  was  thus  excited,  and  as  there 
are  always  plenty  of  schemes,  which,  if  not  safe,  are  specious,  the  discon- 
tented man  embarked  his  capital  in  speculations,  the  great  promises  of 
which  blinded  him  as  to  their  insecurity.  Unwilling  to  reduce  his 
expenses,  he  thought  he  saw  a  safe  mode  of  enlarging  his  income,  and  he 
"  entertained  any  proposition  for  investment,  however  absurd,  which  was 
tendered."  In  the  year  1822  another  cause  occurred,  of  which  the  en- 
tire responsibility  must  rest  with  the  government.  This  was  the  act  of 
Parliament  extending  the  circulation  of  the  small  notes  of  country  bankers 
till  1833,  instead  of  ceasing  at  the  period  allotted  to  them  by  the  bill  of 
Mr.  Peel.  That  act,  said  Mr.  Canning,  hedged  the  one  pound  note  with 
a  divinity  which  was  never  supposed  to  belong  to  it  before.  Only  six  op- 
ponents were  seen  arrayed  against  the  bill.     The  bank  had  made  a  pro- 

*A  parliamentary  debate  occurred  in  1817,  on  the  state  of  the  trade  and  manufac- 
tures of  the  nation,  the  scope  and  aim  of  which  will  at  once  appear  from  the  resolu- 
tions which  Mr.  Brougham  moved,  and  which  were  negatived  by  a  majority  of  55, 
the  numbers  being  118  to  63.  i.  That  the  trade  and  manufactures  of  the  country 
are  reduced  to  a  state  of  such  unexampled  difficulty  as  demands  the  serious  atten- 
tion of  this  house.  2.  That  those  difficulties  are  materially  increased  by  the  policy 
pursued  with  respect  to  our  foreign  commerce,  and  that  a  revision  of  this  sj'stem 
ought  forthwith  to  be  undertaken  by  the  house.  3.  That  the  continuance  of  those 
difficulties  is  materially  increased  by  the  severe  pressure  of  taxation  under  which 
the  country  labors,  and  which  ought  by  every  practicable  means  to  be  lightened. 
4.  That  the  system  of  foreign  policy  pursued  by  his  majesty's  ministers  has  not  been 
such  as  to  obtain  for  the  people  of  this  country  those  commercial  advantages  which 
the  influence  of  Great  Britain  in  foreign  courts  fairly  entitled  them  to  expect. — Al- 
ison's Europe,  vol.  5,  p.  107. 


184  History  of  the  Bank  of  England. 

vision  of  bullion  for  the  country  notes,  with  the  full  conviction  that  the 
law  would  remain  unaltered.  In  the  memorandum  delivered  to  the  House 
of  Commons  the  directors  state,  "the  consequence  of  that  measure  was 
to  leave  in  tke  possession  of  the  bank*  an  inordinate  quantity  of  bul- 
lion;  £14,200,000  in  January,  1824  ;  and  further  to  afford  the  power  of 
extension  to  the  country  banker's  issues,  which  it  is  believed  were  greatly 
extended  from  1823  to  1825."  Mr.  Richards,  in  his  evidence  before 
the  committee  of  the  House  of  Commons  in  1832,  bore  testimony  to  the 
efforts  of  the  bank  in  preparing  to  meet  its  outstanding  engagements. 
"  When  it  was  determined  that  tlie  country  should  return  to  cash  pay- 
ments, a  vast  deal  of  anxiety  was  created  in  the  minds  of  the  public. 
As  the  period  approached  that  anxiety  greatly  increased,  and  many  who 
had  previously  issued  freely,  and  given  ffiir  and  legitimate  accommodation, 
were  afraid  to  continue.  The  bank  had  put  itself  in  a  position  faithfully 
and  honestly  to  fulfil  that  law — that  I  assert  most  fearlessly — and  suc- 
ceeded in  procuring  a  large  quantity  of  bullion.  They  anticipated  the 
period  when,  by  law,  they  were  bound  to  return  to  cash  payments,  and 
enabled  themselves  to  assist  the  country  bankers  to  meet  their  engage- 
ments in  gold." 

In  1822  the  aggregate  currency  was  low;f  but  no  sooner  was  the 
country  banker  allowed  to  issue  more  small  notes,  than  it  began  to  in- 
crease, and  with  it  an  apparent  prosperity  as  dangerous  as  it  was  delu- 
sive. In  1825  the  issues  of  the  country  bankers  were  fifty  per  cent, 
more  than  in  1822.  From  the  middle  of  the  latter  year  to  the  com- 
mencement of  1825,  prices  of  commodities  improved,  in  some  cases 
twenty-five,  and  in  others  fifty  per  cent.  At  the  end  of  1824  the  stock 
of  manufactures  was  shorter  than  usual.  The  whole  country  wore  a 
promising!  appearance,  and  every  one  became  ready  to  embark  his  capi- 

*The  dividends  of  the  bank,  from  1807  to  1822,  were  at  the  rate  of  ten  percent, 
per  annum. 

f  Mr.  Lewis  Lloyd,  a  gentleman  whose  opinion  on  such  subjects  is  entitled  to  the 
greatest  deference,  from  his  long  experience  as  a  partner  in  one  of  the  first  banking 
houses  in  the  kingdom,  (Jones,  Lloyd  &  Co.,)  estimated  the  reduction  of  country 
bank  paper  in  1816,  as  compared  with  its  amount  in  1814,  at  about  a  half;  {Com- 
mons^ Report,  1819,  p.  170.)  Perhaps,  however,  the  estimate  of  Mr.  Sedgwick, 
Chairman  of  the  Board  of  Stamps,  may  be  the  most  accurate,  who  reckoned,  from 
computations  founded  on  the  number  of  stamps  issued  to  the  country  bankers,  that 
the  amount  of  the  notes  in  circulation  from  1810  to  1818,  both  inclusive,  had  been 
as  under : 

1810, £21,819,000  I  1815, £19,011,000 

1812 19,944,000  |  1816, 15,096,000 

1813, 22,597,000     1817, 15,898,000 

1814, 22,709,000  |  1818, 20,507,000 

This  table  sets  the  vicious  nature  of  the  existing  system  in  the  clearest  point  of 
view. — Edinburgh  Review,  vol.  43,  p.  272. 

\  Only  two  years  before,  or  on  7th  March,  1821,  Mr.  Goocn  brought  forward  a 
motion  for  the  appointment  of  a  parliamentary  committee  to  inquire  into  agricultu- 
ral distress;  and  in  the  course  of  the  debate  Mr.  Citrwen  observed,  "  In  the  flour- 
Lshing  days  of  the  empire,  the  income  of  the  nation  was  £400,000,000,  and  the  tax- 
ation was  £80,000,000  annually.  At  present  the  income  is  only  £300,000,000,  yet 
the  taxation  was  nearly  the  same.  In  what  situation  was  the  farmer?  The  aver- 
age of  wheat,  if  properly  taken,  was  not  more  than  62s.,  the  consequence  of  which 


Joint  Stock  Companies.  185 

tal  in  any  thing  which  promised  great  profit.  The  people  congratulated 
themselves  on  "being  wiser  than  their  forefathers;  and  part  of  the  press, 
at  first,  re-echoed  their  congratulations.  Every  one  seemed  smiling  and 
satisfied.  The  shopkeeper  sold  his  goods.  The  merchant  made  large 
profits.  The  manufacturer  could  not  produce  sufiiciently  fast.  _"  Even 
country  gentlemen,  the  most  querulous  of  all  classes,"  says  a  periodical, 
"  the  least  accustomed  to  suffer,  and  the  most  incapable  of  struggling  with 
difiiculties,  could  no  longer  complain." 

The  South  Sea  bubble  was  a  tradition  about  which  many  talked,  who 
knew  nothing  but  the  name.  Those  who  were  familiar  with  the  story 
little  expected  to  see  a  repetition  of  scenes  which  had  shaken  the  foun- 
dations of  commerce.  "  The  schemes  so  lately  afloat,"  says  a  writer  at 
the  time,  "  carried  with  them  a  much  greater  mass  of  fraud  and  decep- 
tion, in  the  aggregate,  than  the  South  Sea  bubble."  It  is  instructive  to 
read  the  comments  of  a  portion  of  the  press.  The  following  extract 
from  the  "  Annual  Register,''''  as  a  calm  survey  of  the  events  of  the  year, 
aspiring  to  the  dignity  of  history,  may  be  regarded  as  most  important, 
from  the  time  allotted  it,  to  form  an  opinion  : 

"  There  was  in  the  present  year  no  diminution  of  that  prosperity  which 
the  country  had  enjoyed  throughout  the  whole  of  1823.  All  agricultu- 
ral produce  was  slowly  but  steadily  on  the  rise.  In  the  cotton  trade 
there  was  a  rapid  increase  ;  and  the  manufacturers  of  wool,  iron  and 
hardware  were  equally  prosperous.  The  abundance  of  capital  led  to 
the  formation  of  numerous  joint-stock  companies,  directed,  some  of 
them,  towards  schemes  of  internal  industry  ;  others  of  them  towards 
speculations  in  distant  countries.  The  '  mines  of  Mexico'  was  a  phrase 
•which  suggested  to  the  imagination  of  every  one  unbounded  wealth  ;  and 
three  companies,  the  Real  del  Monte  Association,  the  United  Mexican 
and  the  Anglo-Mexican,  were  formed  for  the  purpose  of  extracting 
wealth  from  their  bowels,  by  English  capital,  machinery  and  skill. 
Similar  companies  were  formed  in  the  course  of  the  year  for  working  the 
mines  of  Chili,  of  Brazil  and  Peru,  and  of  the  province  of  Rio  de  la 
Plata.  In  the  month  of  March  there  were  upwards  of  thirty  bills  before 
the  House  of  Commons,  for  the  purpose  of  giving  legal  existence  to 
different  companies.  In  all  these  speculations*  only  a  small  instalment, 
seldom  exceeding  five  per  cent.,  was  paid  at  first;  so  that  a  very  moder- 

was,  that  the  farmer  lost  3s.  by  every  quarter  of  wheat  he  grew.  On  the  article  of 
wheat  alone,  the  agricultural  interest  had  lost  £15,000,000,  and  on  barley  and  oats, 
£15,000,000  more.  In  addition  to  this,  the  value  of  farming  stock  had  been  dimin- 
ished by  £10,000,000  ;  so  that  in  England  alone  there  was  a  diminution  of  £40,000,000 
a  year.  The  diminution  on  the  value  of  agricultural  produce  in  Scotland  and  Ireland 
cannot  be  less  than  £15,000,000;  so  that  the  total  loss  to  the  agriculturists  of  the 
two  islands  cannot  be  taken  at  less  than  £55,000,000. — Alison's  Europe,  vol.  5,  p.  354. 
*  Tlie  doctrine  of  free  trade,  afterwards  so  largely  acted  upon  by  the  British 
legislature,  first  began  in  1820  to  engross  the  thoughts  not  only  of  persons  engnged 
in  commerce  and  manufactures,  but  of  the  heads  of  the  government.  On  8th  May, 
1820,  Mr.  Baring  presented  a  petition  on  this  subject  from  the  merchants  of  Lon- 
don;  and  on  the  16th,  Mr.  Kiukman  Fi.vlay,  a  Glasgow  merchant,  equally  remark- 
able for  the  extent  of  his  transactions  and  the  liberality  of  his  views,  brought  for- 
ward a  petition  from  the  Chamber  of  Commerce  of  Glasgow,  which  set  forth,  in 
strong  terms,  the  evils  arising  from  the  restricted  state  of  the  trade  with  China  and 


186  History  of  the  Bank  of  England. 

ate  rise  in  the  price  of  shares  produced  a  large  profit  on  the  sum  actu- 
ally invested.  If,  for  instance,  shares  of  £100,  on  which  £5  had  been 
paid,  rose  to  a  premium  of  £40,  this  yielded  on  every  share  a  profit 
equal  to  eight  times  the  amount  of  the  money  which  had  been  paid. 
This  possibility  of  enormous  profit,  by  risking  a  small  sum,  was  a  bait 
too  tempting  to  be  resisted.  All  the  gambling  propensities  of  human 
nature  were  constantly  solicited  into  action ;  and  crowds  of  individuals 
of  every  description,  the  credulous  and  the  suspicious,  the  crafty  and  the 
bold,  the  raw  and  the  inexperienced,  the  intelligent  and  the  ignorant, 
princes,  nobles,  politicians,  placemen,  patriots,  lawyers,  physicians,  di- 
vines, philosophers,  poets,  intermingled  with  women  of  all  ranks  and  de- 
grees, spinsters,  Avives  and  widows,  hastened  to  venture  some  portion  of 
their  property  in  schemes,  of  which  scarcely  any  thing  was  known  but 
the  name." 

The  speech  from  the  throne  evidenced  the  general  feeling  of  security 
and  satisfaction.  It  congratulated  the  Commons  and  Lords  on  the  "  pros- 
perous condition  of  the  country.  There  never  was  a  period  in  its  history 
when  all  the  great  interests  of  the  nation  were  in  so  thriving  a  condition. 
An  increasing  activity  pervades  almost  every  branch  of  manufactures." 
But  another  source  of  high  profit  appeared  to  offer  through  the  acknow- 
ledgment of  the  independence  of  the  South  American  States.* 

Any  petty  commonwealth  putting  forth  pretences  to  a  popular  govern- 
ment, had  only  to  publish  magnificent  assertions,  and  yet  more  magnifi- 
cent promises,  and  loans  were  made  as  freely  as  required.  Upwards  of 
thirty-two  millions  were  thus  subscribed  by  infatuated  men,  the  principal 
of  which  will  never  be  seen  ;  while  a  pretence  of  keeping  up  the  interest 
is  scarcely  made.  The  following  will  aftbrd  some  idea  as  to  the  mode  in 
which  these  loans  were  managed,  and  will  yield  an  insight  into  the  mad- 
ness to  which  a  state  of  monetary  excitement  will  sometimes  lead  sober- 
minded  men.  This  desire  to  invest  capital  in  foreign  loans  amounted  to 
a  mania.  The  way  in  which  the  Peruvian  loan  was  arranged,  together 
with  the  circumstances  which  attended  it,  may  serve  as  a  specimen  of 
others.  No  sooner  was  it  understood  that  the  State  of  Peru  had  con- 
sented to  borrow,  than  the  utmost  anxiety  prevailed  to  lend.  The  osten- 
sible contractor  was  overwhelmed  with  applications.  The  reply  was,  that 
he  would  dispose  of  the  scrip  in  the  open  market.  At  the  time  ap- 
pointed, a  crowd  of  speculators  surrounded  him,  begging  to  know  the 
terms,  and  pressing  for  an  early  delivery.     All  voices  were  lost  in  the 

the  East  Indies,  and  the  advantages  over  British  subjects  which  the  Americans 
enjoyed  in  that  respect,  and  urged  the  repeal  of  the  usury  laws,  and  the  reduction 
or  removal  of  the  duties  on  the  importation  of  several  foreign  commodities.  These 
views  were  so  favorably  received  in  both  houses  of  Parliament  that  Lord  Lansdowne 
was  encouraged,  a  few  days  after,  to  bring  forward  a  motion  for  the  appointment  of 
a  committee  to  take  into  consideration  the  means  of  extending  our  foreign  commerce. 
lie  dwelt,  in  an  especial  manner,  on  tlie  inconveniences  to  which  the  trade  of  the 
country  was  now  exposed  by  tlie  numerous  duties  which  restricted  it  in  every  direc- 
tion, and  argued,  that  "  whatever  brought  the  foreign  merchant  to  tliis  country,  and 
made  it  a  general  mart  for  the  mercliandise  of  the  world,  was  beneficial  to  our  trade, 
and  enriched  the  industrious  population  of  our  ports." — Alison. 

*  Mr.  Canning  announced  January  1,  1825,  as  the  period  for  recognition  of  the 
South  American  States. 


Peruvian  Loan,  187 

confusion,  and  the  agent  calmly  waited  the  bidding  of  the  eager  multi- 
tude. Various  prices  were  vociferated,  but  the  contractor  maintained  a 
reserved  silence.  By  this  it  Avas  understood  that  the  point  desired  was 
not  reached.  After  a  pause,  eighty-eight  was  named  by  him.  This  was 
known  to  be  a  premium  of  eight  per  cent,  on  the  contracting  price,  and 
a  storm  of  indignation  arose  at  the  idea  of  any  one,  but  the  assembly, 
making  so  large  a  profit.  "  Shame,  shame  !"  "  Gross  extortion  !"  met 
the  contractor's  cars.  Still  there  was  an  eager  pressure  to  get  near  him, 
and  those  who  could  approach  suflicicntly  close  considered  themselves 
fortunate  in  taking  sums  varying  from  £5,000  to  £10,000.  The  practi- 
cal reception  of  his  terms  appeared  so  satisfactory  that  the  contractor 
soon  advanced  the  price  to  eighty-nine ;  on  which  he  was  once  more 
met  with  the  same  expressive  language.  Again,  however,  his  acuteness 
proved  correct,  and  some  of  the  scrip  was  taken  at  the  increased  rate. 
The  noise  became  so  great,  and  the  confusion  so  excessive,  that  few  could 
be  supplied ;  and  though  many  applications  were  made,  there  was  no 
answer.  The  attention  of  the  crowd  was  soon  diverted  by  the  offer  of  a 
broker  to  supply  any  person,  who  required  the  scrip,  at  eighty-eight. 
The  speculator  was  taken  at  his  word,  and  very  large  amounts  were  sold. 
By  this  time  the  news  had  reached  the  stock  exchange  ;'"  and  in  a  short 
period  a  considerable  number  of  the  members  assembled,  and  pressing 
round  the  contractor,  with  great  indignation,  moved  him  and  his  agents 
from  one  part  of  the  edifice  to  another.  The  crowd  soon  became  so  ex- 
asperated, that  they  forced  them  out  of  the  building.  A  desperate 
struggle  followed,  and  at  last  they  were  allowed  to  re-enter.  Being 
tumultuously  called  upon  to  name  a  price,  one  of  them  mentioned  ninety 
as  the  minimum.  Soon  after  this  they  left ;  with  their  departure  the 
mania  appeared  to  subside ;  and  many  of  the  purchasers,  fancying  their 
bargains  were  imprudent,  actually  sold  on  the  spot  at  a  lower  price  than 
they  had  given.  Such  was  the  anxiety  to  obtain  a  portion  of  the  loan  to 
be  granted  to  Peru,  a  loan  which  now  bears  no  interest  whatever. 

The  year  1825,  like  its  predecessor,  was  ushered  in  with  a  flourish  of 
trumpets.  The  ancient  golden  age  had  revived.  Gladness  and  gaiety 
were  in  the  land.  "The  hum  of  successful  industry  was  heard  through- 
out the  fields ;  every  man  was  contented  and  happy  ;  joy  beamed  in 
every  face ;"  and,  as  Lord  Leveson  Gower  expressed  himself,  his  poetic 
spirit  waxing  warm  within  him,  "  distress  had  vanished  from  the  face  of 
the  land."  The  delusion  was  general.  The  song  of  triumph  universal. 
The  Earl  of  Liverpool  rejoiced  in  the  success  which  had  attended  that 
great  measure,  introduced,  with  his  sanction,  by  Mr.  Peel.  "  The  task 
had  been  accomplished  ;  we  were  enjoying  our  reward."  Lord  Dudley 
said :  "  The  country  now  reaped  in  honor  and  in  repose  all  that  they  had 
sown  in  courage,  in  constancy  and  in  wisdom."  "  Our  prosperity  ex- 
tended to  all  orders,  all  professions,  all  districts,  enhanced  by  those  arts 
which  ministered  to  human  comfort,  and  by  those  inventions  by  which 
man  seemed  to  have  obtained  a  mastery  over  nature  by  the  application 
of  her  own  powers." 

*  Mr.  JosKnis  was  expelled  from  the  stock  exchange  for  improper  conduct,  con- 
nected with  shares  in  the  Loioer  Rhine  Steam  navigation  Company,  August,  1825. 


188  History  of  the  Bank  of  England. 

The  contagion  spread  to  the  Commons.  No  year  had  ever  exceeded 
that  of  1824*  in  its  exports;  and  tlie  chancellor  of  the  exchequer,  in  an 
exultant  tone  of  triumph,  congratulated  the  house  on  the  auspicious  cir- 
cumstances of  the  period,  adding,  "  we  may  safely  venture  to  contemplate 
with  instructive  admiration,  the  harmony  of  its  proportions  and  the 
solidity  of  its  basis."  Joint-stock  companies  of  every  conceivable  de- 
scription were  put  prominently  forward. f  In  1824  and  1825J  six  hun- 
dred and  twenty-four  new  ones  made  their  appearance.  Royal  and  im- 
perial mines;  a  mint  company,  to  coin  the  gold  when  it  should  be  pro- 
cured from  Mexico  ;  associations  to  provide  bread  ;  with  others,  which 
rivalled  one  another  in  outrageous  assertions  and  extravagant  protesta- 
tions, possessed  the  public  mind.  The  upper  classes  found  their  repre- 
sentatives in  the  direction  of  these  companies.  A  violent  love  of  lucre 
was  as  prevalent  among  the  higher  as  the  lower  ranks.  Mr.  Grenfell 
asserted,  in  the  Ilouse  of  Commons,  that  he  had  seen  the  prospectus  of 
a  new  speculation,  to  which  the  name  of  a  prince  of  the  blood  was  at- 
tached. Another  bore  the  title  of  the  Archbishop  of  Canterbury.  The 
highest  mercantile  names  in  the  land  were  in  the  direction  of  others. 
All  were  confident,  and  all  hoped  to  reap  enormous  profits.  A  Mr.  Peter 
Moore  boldly  said,  in  the  House  of  Commons,  "  Upon  liis  honor,  he 
believed  that  not  one  of  the  companies  with  which  he  was  connected 
had  less  probity  or  less  stability  than  the  Bank  of  England."  Every  de- 
scription of  property  rose  greatly.  The  artisan  was  in  full  employment.  , 
New  buildings  were  in  progress  of  erection.  Men  of  enterprise,  without 
capital,  could  command  funds  for  any  plausible  undertaking. 

When  introducing  his  motion  on  the  address  to  the  king.  Lord  Leve- 
eoN  GowER  said :  "  Such  is  the  general  state  of  prosperity  at  which  the 
country  has  arrived,  that  I  feel  at  a  loss  how  to  proceed,  whether  to  give 
precedence  to  our  agriculture,  which  is  the  main  support  of  the  country, 
to  our  manufactures,  which  have  increased  to  a  most  unexampled  extent, 
or  to  our  commerce,  which  distributes  them  to  the  ends  of  the  earth, 
which  finds  daily  new  outlets  for  their  distribution,  and  new  sources  of 
national  wealth  and  prosperity." 

*  The  bank  this  year  announced  its  intention  of  investing  money  on  mortgages, 
and  tlie  security  of  public  stock,  April. 

f  The  contemporary  annalists  have  recorded  facts  which  demonstrate  that  this 
glowing  picture  was  not  the  creation  of  the  orator's  imagination,  but  the  faithful 
portrait  of  the  time  in  which  he  lived.  "  Agricultural  distress,"  says  the  Annual 
Register,  "  had  disappeared;  the  persons  engaged  in  the  cotton  and  woollen  manu- 
factures were  in  full  employment ;  the  various  branches  of  the  iron  trade  were  in  a 
state  of  activity  ;  on  all  sides  new  buildings  were  in  a  state  of  erection ;  and  money 
was  so  abundant,  that  men  of  enterprise,  though  without  capital,  found  no  difficulty 
in  commanding  funds  for  any  plausible  undertaking.  This  substantial  and  solid 
prosperity  was  stimulated  to  an  additional  extent  by  the  operation  of  the  many 
joint-stock  banks  and  companies  which  had  sprung  into  sudden  existence  in  the  for- 
mer year.  Some  of  them  had  put  in  motion  a  considerable  quantity  of  industry, 
and  increased  the  demand  for  various  articles  of  consumption  ;  and  all  of  them,  at 
their  commencement,  and  for  some  time  afterward,  tended  to  throw  a  certain  sum  of 
money  into  more  active  circulation,  and  to  multiply  their  transfers  from  one  hand 
to  another." — Alison's  Europe. 

l  The  anti-corn  law  agitation  commenced  this  year. 


Bubble  Companies.  189 


CHAPTER   XVIII. 

BUBBLE    COMPANIES INCREASE     OF     PROSPERITY VALUE    OF    SHARES COMMENCEMENT    OF 

THE     PANIC FAILURES    OF    COUNTRY    AND    LONDON     BANKERS — SCENE    AT   THE    DISCOUNT 

OFFICE MR.      BARING GREAT      DISTRESS GENERAL     DISCREDIT ASSISTANCE     OF     THE 

BANK DECLINE    OF   THE    FUNDS ISSUE    OF    ONE    POUND    NOTES MANSION-HOISE     MEET- 
ING  ANECDOTES   OF    THE    PANIC HIOTS   IN    THE     COUNTRY — JOINT-STOCK     COMPANIES 

OPINIONS    AS    TO    THE    CAUSE    OF    DISTRESS. 

The  vast  quantity  of  gold  expected  from  the  Soutli  American  mines 
was  so  great,  that  many  well-informed  persons,  according  to  Mr.  Tooke, 
"believed,  and  acted  on  the  belief,  of  a  diminished  value  in  gold  and 
silver  in  consequence."  A  journalist  of  the  day,  writing  on  what  was 
evidently  a  feeling,  if  not  a  belief,  founds  on  it  an  essay,  of  which  the 
following  is  an  extract :  "  The  chancellor  of  the  exchequer  was  obliged, 
to  give  up  his  customary  budget,  and  introduced  a  new  system  of  duties 
in  kind.  I  had  an  opportunity  of  hearing  a  right  honorable  gentleman, 
who  filled  that  situation,  very  pathetically  lahient  that  the  '  over-produc- 
tion of  gold  then  was  as  great  an  evil  as  the  over-production  of  grain  had 
been  formerly.'  'Once,'  he  added,  'the  difficulty  was  how  to  get  gold  ; 
then  the  question  to  be  put  was  how  to  spend  it ;  for  the  nation  already 
resounded  with  the  lamentations  of  suftorors,  forming  creditors  of  the 
State,  but  who  had  been  paid  off  with  gold.' " 

It  is  in  such  things  as  these,  which  satirize  popular  opinion  iu  the 
pursuit  of  public  applause,  that  the  real  feeling  of  a  people  may  often  be 
discovered.  The  pages  of  the  satirist  are  a  vivid  picture  of  society.  As 
a  confirmation  of  this  frenzied  desire,  another  writer  of  the  period  says, 
"  The  earth  was  to  yield  in  such  quantities  of  the  precious  metals,  that 
fears  began  to  be  entertained  of  their  becoming  almost  valueless." 

The  credulity  of  the  British  public  was  only  surpassed  by  the  impu- 
dence of  the  inventor.  Men,  without  any  capital  but  presumption,  pro- 
posed and  carried  out  companies;  and  when,  by  the  aid  of  an  important 
name  or  two,  obtained  perhaps  under  fraudulent  pretences,  and  a  prospec- 
tus full  of  specious  phraseology  and  definite  promises,  they  had  arrived  at 
a  premium,  the  shares  were  sold,  and  the  association  abandoned.  In  a  sa- 
tirical novel  of  the  day,  a  bubble,  to  be  called  "  The  Gold,  Wine  and  Olive 
Joint-Stock  Company,"  is  proposed  to  be  projected.  From  the  writer's 
position,  it  is  very  probable  that  much  of  his  presumed  fiction  was  fact. 
*'  Why,  you  talk,"  says  one  of  th:3  characters,  "  as  if  we  had  any  real  business 
to  transact.  All  we  have  to  do  is  to  puff  our  shares  up  to  a  premium,  hum- 
bug the  public  into  buying  them,  and  then  let  the  whole  concern  go  to 
ruin."  The  history  of  the  difficulty  with  which  the  first  instalment  of 
rent  was  met,  amounting  to  £8  6s.  8d.,  is  unquestionably  a  picture  of  the 
pauperism  and  poverty  which  often  mingled  with  the  shamelessness  of 
the  pretenders.  The  writer  remembers  to  have  seen,  some  time  after- 
wards, the  prospectus  of  a  company,  to  drain  the  Red  Sea  in  search  of  the 
13 


190 


History  of  the  Bank  of  Enr/land. 


gold  and  jewels  left  by  the  Egyptians  in  their  passage  after  the  Israelites. 
Many  similar  jocularities  were  in  circulation,  some  of  which  emanated 
from  the  members  of  the  stock  exchange,  always  alive  to  a  sense  of  the 
ridiculous.  But  it  is  impossible,  and  the  experience  of  every  speculative 
era  has  proved  it,  to  open  the  eyes  of  men  who  are  making  large  profits. 
We  are  all  prone  to  believe  what  is  agreeable,  and  the  movers  in  the 
mania  of  1825  were  no  exception  to  the  rule. 

Every  one  appeared  to  get  rich  without  trouble.  The  prices  of  all  arti- 
cles increased  in  value.  Tenfold  higher  terms  were  paid  for  land,  with 
the  view  of  building  on  it,  than  it  was  worth. 

"The  wildness  of  speculation,"  says  "Knight's  History  of  London," 
"  was  not,  however,  confined  to  joint-stock  projects  ;  but  at  length  reached 
to  commercial  produce  generally.  Money  was  abundant,  and  circulated 
with  rapidity.     Prices*  and  profits  rose  higher  and  higher,  and,  in  short, 

'  All  went  merry  as  a  marriage  bell.'  " 

The  newspapers  could  scarcely  contain  the  announcements  which  day 
after  day  poured  from  the  prolific  pens  of  the  schemers.  Shares  were 
issued  at  high  premiums  ;  loan  after  loan  taken  at  high  rates  ;  but  high 
as  they  were  contracted,  the  extravagant  feeling  of  the  period  sent  them 
all  higher.  The  "  Real  del  Monte  Mining"  shares,  the  value  of  which 
may  be  known  from  being  quoted  shortly  after  at  377  discount,  reached 


*  The  rise  of  prices  consequent  upon  the  inflation  of  this  period,  is 
the  annexed  summary  of  values  in  1823  and  in  1825: 

1823. 
£    «.  d. 

Brimstone,  rough, per  ton,  6  10  0     . 

Butchers'  beef, per  lb.,  0     0  4|-  . 

"        mutton, "  0     04. 

Cochineal,  Spanish, "  1     0  0     . 

Coffee,  British  plantation, per  cwt.,  6     0  0. 

St.  Domingo, "  4     20. 

Cotton,  Georgia,  bowed per  lb.,  0     0  8|  . 

"        Bengal  and  Surat, "  0     0  6|-  . 

Flour,  Yarmouth, per  stone,  14  lb.,  0     18. 

Indigo,  East  India, per  lb.  0     9  9     . 

Iron       per  ton,  6     0  0. 

Lead, "  22  10  0     . 

Rum,  Jamaica, per  gall.,  0     2  9. 

Extra  Jamaica, "  0     3  2 

Saltpetre,  East  India, per  cwt.,  14  0. 

Spices — Cinnamon, per  lb.,  16  8. 

Mace, "  0     5  2     . 

Nutmegs, "  0     3  1. 

Pepper,  black, "  0     0  5^. 

Spelter,  (1824,) per  ton,  20  10  0     . 

Sugar,  B.  P.  Gar.,  average, per  cwt.,  110  0     . 

"       white,  Havana, "  2    4  0     . 

Silk,  Reggio, per  lb.,  0  116     . 

"     China, "  100. 

Tallow, per  cwt.,  1110     . 

Tobacco,  Virginia,  ordinary,, per  lb.,  0     0  2|  . 

Tin  block, per  cwt.,  3  17  0     . 

Wool, per  lb.,  0.    6  6     . 


indicated  by 

1825. 

£    «.  a. 

.     10     0  0 

.       0     0  8 

.       1     0  7i 

1     6  0 

.       6  13  0 

.       4     8  0 

.       0     1  6i 

.       0     1  H 

.       0     2  6 

.       0  16  0 

.     13     0  0 

.     30  10  0 

.       0     3  4 

.       0     3  8 

.        1  16  0 

.       0  13  6 

.       0  18  0 

.       0  12  0 

.       0     0  9i 

.     41  15  0 

2     5  2 

.       2  17  0 

.       0  17  0 

.       18  0 

.       2     3  0 

.       0     0  6i 

.       5     1  0 

0     9  6 

Value  of  Shares. 


191 


1,400  premium,  making  a  difference  of  £1,777  per  share.  The  "  Bolanos," 
and  other  foreign  mining  companies,  mounted  to  525  premium.  The 
less  the  place  was  known  where  the  mine  was  to  be  sunk,  the  higher  the 
premium  reached,  the  bolder  and  the  more  exorbitant  were  the  demands 
made  on  the  public  credulity.  The  "  Tlalpuxahua"  was  done  at  £299. 
Rumors  and  reports  of  veins  of  gold  discovered,  had  only  to  be  fastly 
propagated,  to  be  freely  credited. 

The  following  table  will  give  an  idea  of  the  height  to  which  the  mad- 
ness of  the  period  had  raised  the  prices  of  mining  shares  in  one  month : 

Anglo-Mexican, £10  paid. 

Brazilian, 10     " 

Columbian, 10     " 

Real  del  Monte 70     " 

United  Mexican, 10     " 

The  shopkeeper  ceased  to  toil,  that  he  might  become  suddenly  rich. 
The  merchant  embarked  his  capital  and  his  credit ;  the  clerk  risked  his 
reputation  and  his  place  to  obtain  a  share  of  the  broad  golden  stream, 
which  waited  to  be  drunk.  The  broker  could  scarcely  find  time  to  exe- 
cute his  commissions.  The  ordinary  business  of  the  funds  were  disre- 
garded. The  regions  of  the  stock  exchange  wore  an  appearance  of  per- 
petual bustle.*  But  a  great  change  was  at  hand.  This  desire  of  adven- 
ture, and  the  rising  aspect  of  all  markets,  created  an  unfavorable  foreign 
exchange,!  Avhich,  together  with  the  specie,  sent  to  fulfil  the  loans  made 
to  foreign  States,  occasioned  seven  millions  and  a  half  of  gold  to  be  sub- 
tracted from  the  bank  coffers  by  November,  1825. 


Dec.  10, 1S24. 

Jan.  11, 1S25. 

£33pm. 

10s.  dis... 

£  158  pm. 
70    " 

19  pm. 
550     " 

82    " 
1,350    " 

35     " 

155    " 

*  The  following  is  a  statement  of  the  new  associations  that  sprung  up  after  the 
year  1823,  and  the  nominal  capital  subscribed  for  their  various  imdertakiugs : — 
Doubled  ay's  Financial  History  of  Engla7id : 


74  Mining  companies, £  38,370,000 

29  Gas  companies, 12,077,000 

20  Insurance  companies,..  35,820,000 

26  Investment  companies,.  52,600,000 

54  Eaihvay  and  canal  co.'s,  44,051,000 


67  Steam  companies £  85,555,000 

11  Trading  companies,.. .  10,450,000 

26  Building  companies,  . .  13,781,000 

23  Provision  companies,. .  836,000 

202  Miscellaneous, 148,109,000 


Mating,  in  one  year,  a  total  of  532  companies,  with  a  nominal  capital  of 
£441,649,600  sterling. 

\  It  is  almost  unnecessary  to  explain,  that  the  par  of  exchange  is  fixed  on  a  com- 
parison of  the  intrinsic  value  of  the  currencies  exchanged,  and  that,  upon  this  princi- 
ple, in  fixing  the  rate  of  exchange  between  Hamburg  and  this  country,  thirty-four 
Hamburg  shillings  are  computed  to  be  equal  to  a  British  pound  sterling.  But  if  the 
Hamburg  currency  should,  by  any  accident,  lose  one-half  of  its  intrinsic  value, 
thirty-four  Hamburg  shillings  would  no  longer  be  equal  to  a  British  pound  stei-ling. 
The  exchange  with  Britain  would  turn  against  Hamburg  in  proportion  to  the  loss  of 
value  which  its  currency  had  experienced,  and  it  would,  of  course,  be  necessary,  in 
remitting  from  Hamburg  to  Britain,  to  pay  sixty-eight  Hamburg  shillings  for  every 
British  pound.  Applying  these  principles  to  the  British  currency,  we  find,  that  as 
the  price  of  bullion  rose,  or,  in  other  words,  as  bank  notes  decreased  in  value,  all 
our  foreign  exchanges  became  proportionally  unfavorable;  only,  however,  when 
remittances  were  made  by  means  of  paper.  In  that  case,  when  the  notes  of  the 
Bank  of  England  were  exchanged  against  the  pure  currencies  of  Paris,  or  of  Ham- 


192  History  of  the  Bank  of  England. 

In  that  month  the  alarm  began.  The  directors  of  some  of  the  compa- 
nies consented  to  their  being  dissolved,  on  condition  of  retaining  one- 
fourth  of  the  deposits  to  meet  contingent  and  past  expenses.  The  banks 
where  the  deposits  of  others  had  been  phiced  were  besieged  to  procure  a 
return.  The  lord  mayor  was  applied  to  by  many  who,  rejoicing  at  first 
in  the  prospect  of  profit,  shrank  from  the  chance  of  loss.  From  this  pe- 
riod the  tide  turned.  The  eyes  of  the  people  opened  to  their  marvelous 
absurdity.  The  sellers  became  more  numerous  than  the  purchasers ;  and 
by  December  had  arisen  a  voice  of  alarm  so  loud  that  it  reached  to  the 
remotest  provinces  of  the  empire,  and  so  deep  that  it  penetrated  to  the 
heart  of  the  metropolis. 

By  the  23d  of  November,  1825,  greater  difficulty  existed  in  obtaining 
commercial  discounts  than  had  been  experienced  for  some  years.  The 
extreme  caution  of  the  directors  of  the  bank,  who,  witnessing  a  decline 
in  the  exchanges,  feared  a  fresh  exportation  of  their  gold,  was  the  imme- 
diate cause.  The  applications  of  the  highest  houses,  equal  in  stability  to 
the  bank,  were  only  partially  complied  with.  It  may  be  supposed  that 
the  coming  storm  was  little  anticipated  when  the  following  remark  was 
made  by  a  high  authority :  "  They  contract  the  issue  of  their  bank  notes 
with  more  timidity  than,  perhaps,  the  real  urgency  of  the  case  demands." 
"  The  distress  occasioned  by  the  limitation  exceeds  belief."  These  com- 
ments, occurring  immediately  preceding  the  panic,  prove  that  it  was  but 
little  expected.  But  if  the  directors  were  compelled  to  limit  their  ac- 
commodation, great  care  was  evinced  that  credit  should  not  be  injured 
by  it.  The  most  eminent  firms,  the  character  and  wealth  of  whom 
placed  them  beyond  suspicion,  were  selected  for  reduction,  so  that  no  re- 
proach could  be  attached  to  them. 

In  an  interview  which  the  bank  authorities  held  with  the  chancellor  of 
the  exchequer,  towards  the  end  of  November,  some  high  words  appear  to 
have  passed,  in  which  the  chancellor  said  the  bank  bad  brought  them- 
selves into  a  situation  too  serious  to  be  treated  with  disregard,  though 
the  evil  must  work  its  own  cure.  The  governor  reminded  him  that  they 
had  undertaken  the  dead  weight  when  no  one  else  would  do  so.  Past 
services  arc  generally  forgotten  ;  and  the  chancellor  replied  that  it  was 
only  a  private  contract,  and  had  no  connection  with  their  corporate  privi- 
leges. The  following,  from  the  "  Tmes,"  will  give  some  idea  of  the  in- 
tense anxiety  to  obtain  money :  "  Yesterday  was  the  day  for  effecting 
discounts  at  the  bank  on  London  bills.  It  is  customary  to  leave  them 
the  day  before,  and  the  answer  is  returned  on  Thursday.     The  decision 


burg,  it  was  necessary  to  pay  a  premium  of  .about  twenty  per  cent,  on  tlie  sum  re- 
mitted. But  when  bullion  was  exchanged  against  those  currencies,  the  premium 
on  the  sum  remitted  was  reduced  to  between  five  and  eight  per  cent. ;  which  pre- 
mium, therefore,  expresses  the  real  amount  of  the  exchange  against  this  country ; 
for  if,  when  the  paper  currency  of  the  Bank  of  England  is  exchanged  against  the 
pure  currencies  of  the  continent,  a  premium  of  twenty  per  cent,  must  be  paid  in 
addition  to  the  sum  remitted  ;  and  if,  when  bullion  is  exchanged,  the  premium  is  re- 
duced to  five  or  eight  per  cent.,  to  what  can  this  difference  be  imputed  but  to  the 
inferior  value  of  the  paper.  Holding  this  fact,  therefore,  to  be  conclusive  as  to  the 
depreciation  of  the  paper,  the  only  question  that  remains  to  be  considered  is,  the 
cause  of  that  depreciation. — Edinburgh  Review,  Feb.,  1826,  p.  150. 


Failure  of  Country  Bankers.  193 

is  usually  given  before  one,  at  the  latest.  Long  before  that  hour  had 
struck,  the  place  was  besieged ;  and  when  at  last  the  expected  time 
came,  notice  was  given  that  the  answers  could  not  bo  announced  till  two. 
Two  o'clock  arrived,  and  the  anxiety  of  those  who  waited  was  at  the 
highest  pitch  ;  and  then  another  notice  was  given,  stating  that  a  further 
delay  must  take  place  till  half-past  two.  During  the  whole  of  the  period 
the  directors  were  in  close  deliberation  in  the  bank  parlor.  By  this  time 
the  assembly  was  immense ;  and,  when  intimation  was  made  that  the  ar- 
rangements were  complete,  a  rush,  similar  to  that  at  a  theatre,  ensued,  to 
gain  access  to  the  window  at  which  answers  were  to  be  given.  The  con- 
fusion was  so  great  that  when  four  o'clock  arrived  the  crowd  had  not  dis- 
persed, and  it  could  not  be  ascertained  whether  the  bills  were  discounted, 
or  part  discounted,  or  rejected.  During  the  ministration  of  the  clerk  at 
the  window  he  was  frequently  called  away  to  receive  fresh  instructions. 
The  directors  did  all  in  their  power,  but  that  power  was  limited." 

So  great  was  the  emergency,  that  the  principals  of  some  of  the  first 
mercantile  firms  waited  in  person,  in  anxious  expectation,  to  hear  their 
fate. 

The  country  banking  houses  were  the  first  to  fall.  The  important 
York  house  of  Wentwortii  &  Co.  advertised  that  they  were,  "  under 
the  most  painful  circumstances,  compelled  to  suspend  payments." 
£200,000  in  notes  of  their  issue  were  said  to  be  circulated  ;  and  the  ef- 
fect of  this  failure  was  severe.  It  was  confidently  believed  at  the  time 
that  if  the  London  agent  had  honored  Wentwortii's  bills,  all  would 
have  been  well.  Some  curious  statements  were  made  concerning  these 
transactions ;  but  the  probability  is,  that  the  London  bankers  were  justi- 
fied in  their  proceedings,  and  the  fiict  that  Wentworths  were  unable  to 
resume  payment  is  some  proof  of  their  discretion.  It  was  a  time  for 
caution,  but  it  was  a  time  also  for  kindness  and  sympathy. 

The  evil  of  an  unlimited  currency*  being  permitted  to  firms  not  suffi- 
ciently responsible,  was  fearfully  felt.  By  an  extraordinary  anomaly,  the 
bank  was  without  the  issue  of  a  single  one-pound  note ;  while  country 
bankers,  many  of  whom  were  mere  retail  shopkeepers,  deluged  the  prov- 
inces with  millions.  Terrible  suffering  was  spread  among  the  poorest 
families,  with  whom  these  notes  circulated.  The  distress  was  as  hopeless 
as  extensive.  Since  the  act  of  1817,  paper  had  almost  supplied  the 
place  of  gold  throughout  the  provinces.  If  notes  of  that  kind  are  to  be 
circulated,  wrote  the  "  Times,''''  the  bank  ought  to  do  it ;  not  liovels  in 
the  country,  dignified  by  the  title  of  "  bank"  being  written  over  a  dairy 
or  a  cheesemonger's  shop.  The  notes  of  one  house  were  openly  sold  at 
15s.  in  the  pound.  To  support  credit,  associations  were  formed,  by  the 
most  opulent  pledging  themselves  to  take  the  paper  of  various  firms. 


*  So  long,  therefore,  as  any  individual,  or  association  of  individuals,  may  issue 
notes  of  a  Tow  value,  to  be  used  in  the  common  transactions  of  life,  without  lodging 
any  security  for  their  ultimate  payment,  so  long  is  it  certain  that  those  panics  which 
must  necessarily  occur  every  now  and  then,  and  against  which  no  effectual  precaution 
can  be  devised,  must  occasion  the  destruction  of  a  greater  or  smaller  number  of  banking 
establishments,  and,  by  consequence,  a  ruinous  fluctuation  in  the  supply  and  value  of 
money. — Edinb.  Rtview,  Feb.,  1826. 


1 94  History  of  the  Bank  of  England: 

The  stoppage  of  the  bank*  of  Sir  W.  El  ford,  at  Plymouth,  while  it  added 
to  the  alarm  in  London,  created  a  melancholy  scene  on  the  spot*  The 
people  were  almost  frantic.  The  holders  of  notes  crossed  and  jostled 
each  other  in  all  directions.  There  was  literally  a  whole  population, 
with  food  in  abundance  staring  them  in  the  face,  unable  to  procure  it,  as 
nothing  but  gold  would  be  taken.  Daybreak  witnessed  the  bank  sur- 
rounded by  tumultuous  mobs,  and  the  civil  power  mustered  in  front. 
"A  night  of  fearful  omen  succeeded  to  many  an  unfortunate  family." 
The  run  on  the  Norwich  bank  was  stopped  by  the  notes  of  the  Bank  of 
England  being  given  in  exchange. 

On  the  12th  of  December,  1825,  the  crash  which  struck  terror  and 
alarm  throughout  London,  commenced  with  the  partners  in  the  banking 
house  of  Sir  Peter  Pole  tfe  Co.,  which  was  said  to  have  yielded  £40,000 
a  year  for  the  previous  seven  years,  announcing  their  incapacity  to  meet 
the  claims  of  their  creditors.  At  nine  o'clock  this  stoppage  was  known, 
and  the  exchange  was  resorted  to,  to  ask  the  cause,  and  inquire  if  other 
houses  were  in  danger.  Forty-four  country  banks  were  connected  with 
the  firm,  and  the  ruin  of  many  was  anticipated.  The  agitation  of  the 
city  exceeded  every  thing  that  had  been  witnessed  for  a  century.  The 
funds  fluctuated  violently.  Rumors  of  the  failures  of  other  firms  spread 
rapidly.  On  the  13th  an  important  house,  possessed  of  half  a  million  of 
undeniable  securities,  declared,  after  a  most  severe  pressure,  an  inability 
to  meet  its  creditors.  On  the  14th,  a  West-end  banker  advertised,  that 
though  compelled  to  pause  for  the  present  in  his  payments,  he  hoped  to 
resume  on  the  following  Saturday  ;  and  in  this  he  was  successful.  On 
the  same  day  the  distress  was  increased  by  the  stoppage  of  two  firms, 
known  as  Sikes,  Snaith  <fc  Co.  and  Everett,  Walker  «t  Co.  The  con- 
fusion spread.  Men  ran  in  alarm  and  dread  to  draw  the  balances  from 
the  hands  of  their  bankers.  Lombard-street  was  crowded  with  persons 
waiting  in  anxious  fear  or  idle  curiosity.  A  few  gazers  around  a  door 
were  sufficient  to  create  the  destructive  rumor  that  a  run  was  made  upon 
the  establishment.  But  there  was  no  occasion  for  rumor.  The  people 
seemed  to  anticipate  that  the  bankers  kept  all  their  deposits  to  answer 
unreasonable  demands,  and  that  the  expense  of  a  banking-house  was 

*  Greatly  as  the  destruction  of  private  fortunes  and  the  wide-spread  mischief  and 
ruin  occasioned  by  the  late  crisis  in  the  money  market  are  to  be  lamented,  it  is  no 
small  satisfaction  to  know  that  they  have  not  proceeded  from  anj'  thing  aflfecting  the 
foundations  of  the  wealth  and  prosperity  of  the  country.  The  sails  and  rigging 
of  the  vessel  of  State  have  been  torn  and  injured  bj'  the  violence  of  the  tempest, 
but  her  timbers  are  as  sound  and  fresh  as  ever.  The  bankruptcy  and  distress  in 
which  so  many  have  been  involved  have  come  upon  us  in  the  midst  of  profound 
peace,  and  at  a  period  when  all  the  great  branches  of  industry — agriculture,  manu- 
factures and  commerce — were  in  a  state  of  rapid  improvement,  and  when  the  public 
revenue  was  more  than  sufficient  to  meet  all  the  wants  of  the  State.  No  one,  indeed, 
who  has  given  the  least  attention  to  the  subject,  can  suppose  for  a  moment  that  the 
late  crisis  was  either  primarily  occasioned,  or  in  any  degree  aggravated  by  a  falling 
off  in  any  of  the  sources  of  wealth.  It  is  admitted  on  all  hands  that  it  sprung  from 
a  totallj'  different  cause — from  some  defect  in  the  system  on  which  the  business  of 
banking  is  conducted  in  England  ;  and,  while  the  frightful  extent  of  the  evils  expe- 
rienced calls  loudly  for  inquiry  into  their  cause,  it  at  the  same  time  enforces  the  ne- 
cessity of  adopting  some  such  system  as  may  be  fitted  to  guard  effectually  against 
their  future  occurrence. — Edinb.  Review,  vol.  43,  p.  263. 


Comments  of  "  The  Times" — General  distress.  196 

maintained  for  the  sole  purpose  of  benefiting  the  public.  Many  a  firm, 
of  unimpeachable  honor  and  unquestionable  solvency,  was  compelled  to 
bend  before  the  storm.  The  merchant  looked  to  his  banker  for  support ; 
but  all  the  efforts  of  the  latter  were  directed  to  save  himself  from  destruc- 
tion. The  usual  channels  of  credit  were  stopped,  and  the  circulation  of 
the  country  completely  deranged.  Checks  came  pouring  in  from  all 
quarters ;  and  it  was  remarked,  that  "  the  question  would  soon  be,  not 
who  goes,  but  who  stands  ?"  On  the  exchange  the  names  of  other  firms 
were  openly  mentioned ;  and  no  report,  however  absurd,  failed  to  obtain 
implicit  belief. 

The  "  Times,"  in  commenting  upon  the  assistance  granted  to  the  house 
of  Pole,  Thornton  <fe  Co.,  remarked,  *'  It  is  not  probable  that  gold,  to 
a  great  amount,  has  been  in  the  first  instance  transmitted  to  this  house. 
An  additional  quantity  of  paper,  convertible,  no  doubt,  into  cash,  on  ap- 
plication to  the  bank,  to  the  amount  of  the  sum  advanced,  has  been  sent 
into  the  market.  We  suppose  that  the  funds  possessed  by  this  and  other 
houses,  not  immediately  convertible  in  the  case  of  a  run  upon  their 
credit,  may  consist  of  mortgages ;  and,  if  so,  it  is  a  public  evil  that 
bankers,  the  dealers  in  paper,  should  have  seized  so  much  of  the  real 
property  of  the  kingdom,  and  not  left  themselves  suflacient  to  meet  an 
emergency.  They  resemble  pike  and  other  rapacious  fish,  who  pursue 
and  seize  a  gudgeon,  which,  when  they  are  on  the  point  of  swallowing, 
a  larger  pike  supervenes  and  appropriates  the  victim." 

The  members  of  the  press  generally  performed  their  great  duty.  "  It 
ought  to  be  impressed  on  all  who  possess  any  influence  at  the  present 
moment,"  said  the  "  Morning  Chronicle"  "  that  a  blind  selfishness  will 
soon  bring  its  own  punishment  along  with  it ;  that  if  all  persons  rush  to 
the  banks  to  draw  out  their  balances,  which  the  bankers  must  pay  in- 
stantly, while  they  cannot  compel  their  debtors  to  pay  the  balances  due 
to  them,  the  consequences  must  be  very  serious  indeed.  We  can  hardly 
conceive  any  amount  of  capital  equal  to  this  conflict." 

The  rumor  was  spread  that  a  firm  in  Mansion-IIouse-strcet  had  stopped, 
and  an  immediate  rush  took  place  from  the  Royal  Exchange  and  stock 
exchange  to  discover  the  truth.  So  great  was  the  crowd  that  it  was 
necessary  to  remove  them  by  force.  The  clerks  grew  alarmed  at  the 
tumult  outside,  and  rushed  simultaneously  to  the  outer  desk,  in  appre- 
hension of  a  more  violent  demand  than  their  duty  would  allow  them  to 
meet.  "  Nefarious  attacks,"  says  one,  "  continue  to  be  made  on  the 
credit  of  other  banking  houses,  by  collecting  crowds  of  idle  people  round 
their  doors,  and  reporting  a  run."  The  distresses  of  the  country  people, 
as  day  by  day,  and  almost  hour  by  hour,  circulars  were  issued  announcing 
fresh  stoppages,  bafile  belief.  Bills  might  be  seen  in  many  of  the  shops 
of  the  different  localities,  announcing  that  the  banker's  notes  would  be 
received  for  goods.  One  house  took  £2,000  in  this  manner.  Another 
was  so  crowded  that  the  sufferers  could  only  be  admitted  one  at  a  time. 
The  doors  were  besieged,  and  men  might  be  seen  issuing  burdened  with 
drapery  or  grocery  which  they  had  bought,  in  preference  to  retaining  the 
dishonored  paper.  A  Cambridge  bank  advertised  that  "they  would 
keep  open  an  hour  or  two  later,  and  open  the  next  morning  an  hour 
earlier;  that  the  holders  of  their  notes,  if  there  be  any  then  in  circula- 


3  96  History  of  the  Bank  of  England. 

tion,  may  have  them  exchanged  for  gold  or  bank  paper."  Tlie  Messrs. 
GuRNEY,  at  Norwich,  by  boldness  in  going  beyond  their  usual  line, 
saved  many  from  ruin,  and  lost  nothing,  worthy  of  notice,  through  it. 
But  it  is  to  be  feared  that  these  are  few,  though  honorable  exceptions. 
An  Oxford  bank  ostentatiously  exhibited  such  a  profusion  of  gold  that 
every  one  was  sati  fied,  and  no  person  thought  of  demanding  it. 

Country  bankers  from  all  parts  of  England  were  in  town,  trying  to  se- 
cure cash.  The  heads  of  all  the  London  houses  were  as  regular  in  their 
attendance  as  their  clerks.  It  was  common  to  hear  of  men,  worth 
£100,000,  begging  the  loan  of  ,£1,000  as  a  personal  favor,  on  unexcep- 
tionable security.  The  gloom  spread  to  the  exchange.  Exchequer  bills 
fell  to  sixty-five  shillings  discount,  and  the  brokers  closed  their  books, 
and  refused  to  engage  in  any  transactions  whatever.  The  bankers  from 
the  provinces  demanded  gold,  not  to  the  extent  of  their  circulation,  but 
to  the  extent  of  all  their  engagements  of  every  description,  in  anticipa- 
tion of  a  run.  Many  packages  of  gold  forwarded  to  these  gentlemen 
came  back  unopened.  Hundreds  of  thousands  of  sovereigns,  said  Mr. 
PouLETT  Thompson,  were  sent,  which  were  returned  unpacked  and  un- 
touched, having  been  provided  only  to  meet  the  chance  of  a  nm.  The 
Bank  of  England  were  called  on  to  supply  gold  for  all  the  notes  of  these 
banks,  and  post-chaises  and  four  were  regularly  stationed  in  Lombard- 
street  all  the  day.  The  principal  stock  was  closed  at  the  bank,  but  trans- 
fers were  allowed  on  this  occasion  up  to  the  last  possible  period  before 
making  out  the  dividend.  One  hundred,  an  unprecedented  number,  were 
effected  in  one  day.  The  partners  of  London  banking-houses  were  called 
out  of  church  to  answer  the  expresses  of  their  correspondents;  and  the 
latter  often  carried  off  a  reserve  of  gold  of  fifty  per  cent,  more  than  they 
were  likely  to  require.  The  governor  and  deputy -governor,  with  many 
of  the  directors,  were  constantly  at  their  post.  "They  came  early  and 
they  left  late."  The  guards  also  remained  all  day  in  the  building,  in  case 
their  exertions  should  be  required. 

On  the  14th  December,  1825,  a  meeting  of  merchants  and  traders, 
only  of  London,  was  convened  at  the  Mausion-House,  to  devise  mitiga- 
ting measures  for  this  calamity.  It  was  stated  that  the  distress  arose 
from  want  of  confidence  in  men  able  to  pay  40s.,  50s.  and  60s.  in  the 
pound.  That  those  who  had  any  confidence  in  their  bankers  ought  to 
continue  to  pay  in  their  money  as  usual;  and  were  this  done,  the  whole 
difficulty  would  be  met.  The  governor  and  deputy-governor  of  the 
bank*  oflScially  communicated  to  the  lord  mayor  that  they  would  do 


*  It  may  easily  be  conceived  what,  in  a  great  mercantile  community,  deeply  engaged 
in  the  most  extensive  and  onerous  engagements,  must  have  been  the  effect  of  such  a  sud- 
den contraction  of  the  currency,  at  the  very  time  when  its  expansion  was  most  loudly 
called  for ;  but  imagination  itself  can  hardly  conceive  the  consternation  and  distress 
which  followed.  The  country  bankers,  whose  issues  had  nearly  doubled  in  the  pre- 
ceding year,  having  reached  the  enormous  amount  of  £14,000,000,  were  the  first  to 
be  assailed.  They  were  besieged  with  applications  from  their  numerous  customers 
to  make  advances ;  but  the  demand  for  gold  was  so  excessive  that  their  stock  of 
specie  was  soon  exhausted,  and  they  had  no  resource  but  to  apply  to  the  Bank  of 
England  for  assistance.  It  was  the  magnitude  and  constant  increase  of  this  demand 
which  constituted  the  source  of  embarrassment  to  that  establishment.     Very  natu- 


Assistance  of  the  Bank.  IST 

everythino;  in  their  power  to  alleviate  the  city  and  country  bankers,  Mr. 
Alexander  Baring,  afterwards  Lord  Ashburton,  in  a  speech,  which, 
from  its  energy  and  insight  into  business,  was  calcuhited  to  produce  a 
great  effect,  "demanded,  after  an  elaborate  picture  of  the  panic,  "  confi- 
dence ;"  and  so  great  was  the  impression  that  the  assembly,  almost  sim- 
ultaneously, re-echoed  the  word.  After  a  series  of  resolutions,  in  which 
they  determined  to  support  the  banking  interest  to  the  utmost  extent  of 
their  capacity,  the  meeting  separated,  "  One  establishment,"  wrote  the 
"  Courier,"  "  falls  after  anodier.  The  fabric  of  our  credit  is  in  flames  around 
us.  Five  great  bouses  have  already  been  sacrificed  to  panic ;  three  or 
four  others  have  suffered  immense  losses.  To  withstand  a  pressure,  aid 
must  be  given  largely  and  liberally.  In  the  words  of  Mr.  Baring,  let  us 
follow  general  principles  in  ordinary  cases,  but  in  an  extrao'rdinary  emer- 
gency, like  the  present,  let  us  resort  to  an  adequate,  though  extraordinary, 
remedy." 

The  distress  continued  to  increase.  Trade  was  at  a  stand.  Doubt 
brooded  everywhere.  No  one  knew  who  was  trustworthy.  The  million- 
aire of  yesterday  might  be  the  bankrupt  of  to- day.  It  was  almost  im- 
possible for  any  man,  engaged  in  business,  to  know  his  own  position. 
An  order  was  issued  to  the  officers  of  the  mint  to  expedite,  with  all  pos- 
sible dispatch,  a  coinage  of  sovereigns;  and  one  hundred  and  fifty  thou- 
sand a  day  were  made  for  the  space  of  a  week.  Gold  coin  was  sent  to 
every  town  in  the  kingdom.  Then  was  the  mischief  felt  of  the  country 
bankers  having  been  allowed  to  continue  and  increase  the  circulation  of 
their  notes  of  one  and  two  pounds.  There  was  a  constant  demand  for 
their  gold ;  and  this  demand  affected  the  bank,  which  was,  indeed,  the 
only  resource  ;  and  every  house  in  London  found  itself  under  the  neces- 
sity of  meeting  the  demands  made  by  its  depositors,  through  the 
medium  of  the  former.  Nor  were  they  backward  in  affording  assistance. 
In  a  few  weeks  their  discounts  rose  from  five  to  fifteen  millions.  Ad- 
vances were  made  upon  the  simple  deposits  of  title-deeds,  often  without 
even  an  examination.  Exchequer  bills,  to  an  enormous  amount,  were 
sold  to  meet  the  demand  from  the  mercantile  interests.  Gold  from 
abroad,  and  coin  from  the  mint,  were  constantly  arriving  at  the  bank, 

Mr.  Harman  said,  in  his  examination  before  the  Parliamentary  Com- 
mittee, "  we  took  stock  in  as  security;  we  purchased  exchequer  bills; 
we  not  only  discounted  outright,  but  we  made  advances  on  deposits  of 
bills  of  exchange  to  an  immense  amount;  and  we  were  not,  on  some  occa- 
sions, over  nice,  seeing  the  dreadful  state  in  which  the  public  were," 

rally,  and,  indeed,  unavoidably,  the  bank  contracted  their  issues,  which,  in  the  first 
week  of  December,  were  down  to  £17,000,000.  The  effect  of  this  was  to  bring  a 
great  number  of  the  private  bankers  to  an  immediate  stop.  In  the  end  of  November, 
the  Plymouth  Bank  failed ;  this  was  followed,  on  the  5th  December,  by  the  failure  of 
the  house  of  Sir  Peter  Pole  <fe  Co.,  in  London,  which  diffused  universal  consterna- 
tion, as  it  had  accounts  with  forty  country  bankers.  The  consequences  were  disas- 
trous in  the  extreme.  In  the  next  three  weeks,  seventy  banks  in  town  and  country 
suspended  payment.  The  London  houses  were  besieged  from  morning  to  night  by 
clamorous  apjjlicants,  all  demanding  cash  for  their  notes ;  the  Bank  of  England  it- 
self had  the  utmost  difficulty  in  weathering  the  storm,  and  repeated  applications 
were  made  to  government  for  an  order  in  council  suspending  cash  payments. — Aut- 
son's  Europe,  vol.  6,  p.  248. 


198  History  of  the  Bank  of  England. 

The  course  which  the  directors  adopted,  though  opposite*  to  that  of 
IV97,  appears  to  have  been  correct.  Within  three  weeks  they  doubled 
their  discounts.  From  the  11th  to  the  1 7th  December,  1825,  the  demand 
for  gold  was  urgent,  incessant  and  insatiable.  A  suggestion  was  made  to 
government  for  an  order  in  council  to  restrain  the  payments  in  specie, 
under  the  apprehension  that  it  might  be  exhausted.  Mr,  Canning  is  re- 
ported to  have  replied,  in  one  of  his  emphatic  sentences,  that  "  he  would 
never  consent  to  a  thing  of  that  sort,"  But  the  most  extraordinary 
features  of  the  application  was  the  advice  of  Mr.  IIuskisson  to  place  a 
paper  against  their  doors,  stating  they  had  not  gold  to  pay  with,  but 
expected  it  shortly.  It  is,  perhaps,  more  extraordinary  that  the  bank 
deliberated  upon  it ;  but  allowances  must  be  made  for  the  agitation  and 
anxiety  of  the  time.  That  which,  ordinarily,  is  looked  upon  as  unrea- 
sonable, assumes  a  new  form  under  an  almost  insupportable  pressure.  For 
two  or  three  days  the  most  unquestionable  security  would  not  procure 
money ;  nor  could  the  public  funds  be  said  to  have  a  price.  There  was 
no  market  for  bank,t  there  were  no  buyers  of  East  India  stock.     It  was 

*The  amount  of  country  notes  in  circulation,  in  1825,  was  at  least  from  thirty  to 
FORTY  PER  CEVT.  greater  tlian  their  amount  in  1822.  It  was  this  excessive  additionto 
the  currency  that  rendered  it  redundant,  and  caused  a  drain  for  bullion.  And  this 
drain  liaving  forced  the  Bank  of  England  to  narrow  her  issues,  a  shock  was  in  con- 
sequence given  to  credit ;  the  currency  of  the  metropolis  became  more  valuable  than 
that  of  the  country,  and  the  difficulty  of  obtaining  accommodations  in  London  being 
increased  at  the  very  moment  that  the  notes  of  the  country  bankers  were  beginning 
to  be  returned  upon  them,  their  embarrassments  and  ruin  inevitably  followed.  A  few 
isolated  failures  in  different  parts  of  the  country  served  to  excite  a  general  panic, 
and  so  rapid  and  sweeping  was  the  destruction,  that  in  the  short  space  of  five  or 
six  weeks,  from  sixty  to  seventy  banking  establishments  were  compelled  to  stop 
payment. — Edinburgh  Review,  Feb.,  1826. 

f  Bank  of  England  stock,  which,  in  1825,  had  brought  299,  had  at  one  time  this 
year  declined  to  193.  Consols  had  declined  from  96|  to  731 ;  the  changes  from 
1821  to  1827  being  as  foUows: 


Ban] 

\.  Shares. 

Lowest. 

Highest. 

1821,.. 

.     221 

..         240 

1822,.. 

.     235 

252 

1823,.. 

.     204 

246 

1824,.  . 

227 

245 

1825,.. 

.      196 

299 

1826,.. 

.      193 

223 

1827,.. 

.     200 

217 

Consols. 

Lowei 

t.         Highest. 

Ba 

ik  Dividends 

68| 

78| 

10  percent. 

75f 

83 

10 

72 

85f 

8 

84f 

96| 

8 

75 

94i 

8 

731 

84+ 

8 

76f         ..         89i         ..  8       " 

"The  annals  of  Great  Britain,  from  1819  to  1825,  are  fraught  with  the  most  im- 
portant lessons  to  the  reflecting,  on  which  the  attention  of  statesmen  in  future  times 
Bhould  constantly  be  fixed.  They  demonstrate  at  once  the  all-importance  of  the 
currency  upon  the  fortunes  of  the  counti-y,  and  illustrate,  in  the  most  striking  man- 
ner, the  double  set  of  dangers  to  which  a  monetary  system,  based  entirely  upon  the 
retention  of  the  precious  metals,  is  exposed.  From  the  first  introduction  of  the 
metallic  system  in  1819,  to  the  extension  in  1822,  the  history  of  the  country  is 
Qotiiing  but  the  narrative  of  the  dreadful  effects  produced  by  the  contraction 
of  the  currency  to  the  extent  of  above  a  third  of  its  former  amount,  and  the  social 
distress  and  political  agitation  consequent  on  the  fall  in  the  price  of  every  article 
of  commerce  to  littlemore  than  the  half  of  its  former  level.  Its  annals,  from  theexten- 
fiion  of  the  currency,  in  July,  1822,  to  the  dreadful  crash  of  December,  1825,  illustrate 


Eiots  in  ike  Country.  199 

the  opinion  of  Mr.  Huskisson  that  in  forty-eight  hours  all  dealings 
would  have  been  stopped  between  man  and  man,  except  by  way  of  bar- 
ter. Owing  to  the  difierence  in  the  money  and  account  prices  of  con- 
sols, those  bankers,  who  were  compelled  to  sell  stock  to  raise  cash,  paid 
at  the  rate  of  72  per  cent,  for  the  necessity.  On  the  13th  the  bank 
raised  the  discount  to  five  per  cent. 

A  morning  journal  remarked,  "that  to  inspire  confidence  in  houses 
which  can  at  last  only  repay  it  by  insolvency,  is  to  increase  a  direct 
wrong,  and  dreadfully  to  enhance  a  great  commercial  evil.  If  a  house 
fails,  "and  pays  15s,  in  the  pound,  a  foolish  cry  is  raised  that  a  little  rea- 
sonable help  would  have  saved  it.  Saved  what  ?  A  house  that  was,  in 
relation  to  its  debts,  one-quarter  worse  than  nothing.  Ought  such  a  house 
to  be  left  standing  in  a  condition  where  it  was  every  hour  made  the  de- 
pository of  other" people's  money  ?  Even  if  a  banker  pays  20s.  in  the 
pound,  and  has  no  surplus  afterwards,  he  is  not  a  legitimate  banker; 
he  is  trading  without  a  capital,  and  the  least  mishap,  or  the  least  fall 
in  the  public  funds,  if  he  buy  into  them  with  other  men's  money,  may, 
in  one  day,  make  him  an  insolvent." 

The  energy  of  the  direction  was  great  in  administering  relief  to  worthy 
applicants.  "An  eminent  country  banker  was  some  days  in  town  implor- 
ing a  loan  of  £50,000,  for  which  he  offered  double  the  security.  During 
his  stay  a  neighboring  bank  stopped  payment;  the  alarm  of  the  towns- 
people grew  so  strong  lest  his  own  should  follow  the  example,  that  they 
assembled  to  force,  if  possible,  the  payment  of  their  notes ;  nor  could 
they  be  dispersed  without  the  aid  of  the  military.  On  this  intelligence 
reaching  London,  the  50,000  sovereigns  were  supplied,  with  which  the 
banker  "immediately  departed  to  the  scene  of  confusion.  "The  town 
was  swept  of  cash,"  says  one  writer,  "  and  such  a  dearth  of  this  neces- 

the  opposite  set  of  dangers  with  which  the  same  system  is  fraught  when  the  precious 
metals  flow  in  in  abundance,  from  the  undue  encouragement  given  to  speculation  of 
every  kind  by  the  general  rise  of  prices  for  a  brief  period.  To  make  paper  plenti- 
ful when  gold  is  plentiful,  and  paper  scarce  when  gold  is  scarce,  is  not  only  a  dan- 
gei'ous  system  at  all  times,  and  under  all  circumstances,  but  is  precisely  the  reverse 
of  what  should  be  established.  It  alternately  aggravates  the  dangers  arising  from 
over-speculation,  and  induces  the  distress  consequent  on  over-contraction.  The  true 
system  would  be  the  very  reverse,  and  it  would  prevent  the  whole  evils  which  the 
preceding  pages  have  unfolded.  It  would  be  based  on  the  principle  of  making 
paper  a  supplement  to  the  metallic  currency,  and  a  substitute  for  it  when  required, 
not  a  representative  of  it ;  and  plentifully  issued  when  the  specie  is  withdrawn,  it 
should  be  contracted  when  it  returns." — Alison's  Europe,  vol.  6,  p.  249. 

Mr.  Alison's  theory  would  not  work  well.  The  only  sound  principle  as  to  cur- 
rency is  to  adapt  the  volume  of  paper  to  the  volume  of  gold  ;  let  them  fall  or  rise 
together.  The  latter  should  always  bear  a  true  relation  to  the  former,  and  thus, 
when  the  earliest  indications  are  given  of  a  decline  in  the  basis,  (by  foreign  export, 
for  instance,)  then  is  the  time  to  discourage  that  over-trading  which  an  undue  expan- 
sion of  paper  is  sure  to  create.  This  was  clearly  exhibited  in  England  in  1822- 
1824,  (bringing  about  the  revulsion  of  1825,)  and  in  the  United  States  in  1834-1836, 
(producing,  bej'ond  question,  the  revulsion  of  1837,)  and  again  in  New- York,  from 
1849-1857,  when  the  bank  circulation  was  rapidly  increased  fifty-five  per  cent.,  or 
from  $21,912,000  to  $32,300,000;  the  latter  upon  a  declining  specie  reserve  and 
an  unfavorable  condition  of  the  foreign  exchanges,  thus  producing  the  revulsion  of 
1857,  by  which  the  property  of  that  State  became  suddenly  depreciated  fully  three 
hundred  millions  of  dollars. — A}n,  Ed. 


200  History  of  the  Bank  of  Enr/land. 

sary  commodity  ensued,  that  few  persons  had  five  pounds  to  spare  for 
any  purpose  whatever."  Pawnbrokers  and  money-lenders  were  resorted 
to,  till  tlieir  capitals  were  exhausted.  Scarcely  a  sovereign  was  to  be 
seen  throughout  London  which  was  not  new  ;  so  active  had  the  authori- 
ties been  at  the  mint,  and  so  eagerly  had  the  old  coinage  been  carried 
from  the  metropolis.  The  deficiency  in  sovereigns  was  said  at  one  time 
to  be  so  great  at  the  bank  that  applicants  were  compelled  to  receive  half 
sovereigns  in  payment. 

The  gloom  which  pervaded  the  metropolis  was  universal.*  A  vague 
feeling  of  uncertainty  as  to  the  issue  ripened  into  an  indefinite  dread  of 
consequences  almost  as  harassing  as  the  worst  reality.  A  general  bank- 
ruptcy seemed  impending.  The  impression — for  it  scarcely  amounted 
to  a  conviction — that  the  bank  itself,  hitherto  regarded  as  almost  sacred, 
was  sharing  the  danger  of  the  time,  added  to  the  general  anxiety.  Up 
to  this  period,  with  the  single  exception  of  1797,  the  term  bank  had 
been  synonymous  with  safety.  When,  therefore,  it  was  believed  that, 
amid  the  general  wreck  and  ruin,  even  the  Bank  of  England  was  in 
danger,  the  great  hall  of  the  establishment  witnessed  an  eager  proff'er  of 
notes  in  exchange  for  gold,  which,  however,  was  met  as  promptly  as  it 
was  made.  No  attempt  was  offered  to  withhold,  as  in  1797  ;  no  attempt 
to  delay,  as  in  1745.  It  was,  probably,  partly  owing  to  the  unhesitating 
readiness  with  which  the  gold  was  paid  as  fast  as  it  could  be  demanded, 
that  the  confidence  of  the  public  was  so  quickly  restored.  Had  the 
holders  of  the  notes  felt  that  there  was  any  thing  like  hesitation,  the 
alarm  would  have  spread  indefinitely,  and  the  bank  must  have  suffered 
in  proportion. 

The  energy  displayed  in  the  bank  parlor  led  to  the  same  activity  in 
the  executive  department.  The  labor  of  the  clerks  was  trebled  in  the 
discount  office ;  and  in  others  many  were  kept  working  long  after  the 
ordinary  hours.  The  counters  were  besieged,  and  the  attendants  were 
wearied  with  the  constant  demand  for  sovereigns.  The  drain  of  notes 
and  specie  for  the  country  continued  to  be  prodigious.  One  provincial 
banker  carried  with  him  £300,000 ;  and  there  was  scarcely  an  establish- 
ment throughout  the  empire  which  did  not  apply  for  help.  As  it  has 
been  in  most  panics,  the  country  bankers  took  more  than  they  required, 
and  assisted  in  bringing  on  many  of  the  town  failures.  Counterfeit 
sovereigns,  which  rivalled  in  brightness  the  new  issue,  were  numerous,  as 
any  thing  which  looked  like  gold  was  taken  without  hesitation.  The 
manufacturers  rivalled  the  mint  in  activity. 

*  This  melancholy  and  lamentable  revulsion  may,  we  think,  be  clearly  traceable 
to  the  unwise  expansion  of  the  banks,  which,  in  the  first  place,  encouraged  the 
mania  of  1824-5,  for  speculation,  and  superinduced  the  extravagances  of  that  day. 
The  Bank  of  England  had  necessarily  contracted  its  circulation  from  £27,261,600, 
in  1815,  to  £18,172,000,  in  1822-3.  The  country  banks,  at  the  same  time,  had  re- 
duced their  circulation  from  £19,611,000  to  £8,416,000,  a  total  reduction  of  from 
£46,272,000  to  £26,588,000,  or  more  than  forty-two  per  cent.  But  instead  of  grad- 
ually increasing  this  again,  there  was  an  expansion,  in  1824,  more  rapid  than  the 
late  curtailment ;  paper  money  thus  giving  a  sudden  and  violent  impulse  to  our 
trading,  speculation  and  gambling.  Between  1823  and  1825  the  Bank  of  England 
unwisely  enlarged  its  circulation  to  £26,069,000,  and  the  country  banks  to 
£14,980,000,  making  an  aggregate  of  £41,049,000,  against  £26,588,000,  as  above 
stated. — Am.  Ed. 


Remarks  of  Mr,  Richards.  201 

The  danger  of  a  run  upon  any  bank  cannot  be  measured.  The  be- 
ginning of  a  demand  for  gold  may  be  very  trifling;  but  no  sooner  is  it 
known  that  a  run  is  occurring  on  any  establishment,  however  unques- 
tionable its  solidity,  than  it  Is  indefinitely  increased,  each  man  only 
anxious  that  the  supply  should  hold  out  until  his  claim  be  satisfied.  So 
great  was  the  demand  for  one  week,  that  a  doubt  Avas  seriously  enter- 
tained by  all  parties  that  the  bank  would  scarcely  be  able  to  steni  the 
torrent.  They  had,  however,  determined  to  pay  to  their  last  guinea. 
"Another  such  Aveek,"  said  Mr.  Richards,  emphatically,  "  and  the  bank 
could  not  have  stood  it.  Gold  was  expected ;  but  we  were  subject  to 
the  winds  and  the  waves." 

Fortunately,  on  the  last  day  of  the  week,  the  tide  turned.  It  must 
have  done  so  decidedly,  for  Mr.  Richards  to  have  been  "  able  to  call 
out  that  all  was  well,"  when,  reeling  with  fatigue,  he  sought  Lord  Liver- 
pool, with  the  other  members  of  his  majesty's  government,  on  the  after- 
noon of  Saturday,  the  iVth  of  December,  1825. 

The  following  description  of  the  position  of  tho  goveror  and  directors 
of  the  bank  at  Uiis  period  is  from  the  mouth  of  its  deputy-governor  : 

"In    autumn   the  bank   very    seriously  began   to  contemplate   what 
would  be  the  result  of  the  speculations.     Not  only  the  bank,  but  every 
man's  mind  connected  with  the  city,  was  in  an  extreme  state  of  excite- 
ment and  alarm.     I  think  I  can  recollect  on  the  first  Saturday  in  December 
having  come  home,  after  a  very  weary  and  anxious  day,  from  the  bank, 
receiving  a  visit  from  two  members  of  the  committee,  and  one  of  our 
bankers  of  that  class,  at  my  own  house,  stating  the  difficulty  in  which  a 
banker's  house  near  the  bank  was  placed.     The  object  was  to  ascertain 
my  views.     I  was  called  upon  in  consequence  of  the  governor  being  con- 
nected with  the  house  of  Pole   <fe  Co.  by  marriage,  and  other  circum- 
stances.    I  ventured  to  encourage  these  gentlemen,  that  upon  any  thing 
like  a  fair  statement  the  bank  would  not  let  this  concern  fall   through. 
It  was  agreed  that  on  the  following  morning  (Sunday)  we  should  meet 
as  many  directors  as  I  could  get  together,  with  the  three  gentlemen  who 
had  called  upon  me,  and  that  some  eminent  merchants,  friends  of  the 
house,  should  be  called  to  the  meeting,  to  assist  with  their  opinion.    The 
result  was,  that  the  directors  authorized  their  chairs  to  say,  that  assist- 
ance  should  not  be  wanting.     It  was  agreed  that  £300,000  should  be 
placed  at  the  disposal  of  Pole  &  Co.  the  next  morning,  on  the  security 
of  a  number  of  bills  of  exchange  and  notes  of  hand,  and  over  and  above 
a  mortgage  on  Sir  Peter  Pole's  property,  which   was  to  ride  over  the 
whole.     During  that  week,  I  believe,  the  attention  of  every  man  was  di- 
rected much  more  to  the  state  of  that  house  than  to  an}"^  thing  else. 
They  fought  through  it  till  Thursday  or  Friday  pretty   manfully,  and 
about  that  time,  from  a  conversation  I  had  with  a  partner  in  the  house,  I 
was  led  to  fear  that  it  might  fail ;  however,  it  fought  on  till   Saturday 
evening.     Sunday   passed,  and  on   Mond^iy  the   storm   began,    and  till 
Saturday  night  it  raged  with  an  intensity*  it  is  impossible  for  me  to  de- 


*  "  We  were  (said  Mr.  Huskisson)  within  twenty-four  hours  of  barter."    (See 
Appendix,  for  a  copious  review  of  this  important  period. — Am.  Ed. 


202  History  of  the  Bank  of  England. 

scribe.  On  the  Saturday  night  it  had  somewhat  abated.  The  bant  had 
taken  a  firm  and  deliberate  resolution  to  make  common  cause  with  the 
country,  as  far  as  their  humble  efforts  would  go.  On  Saturday  night  it 
■was  my  happiness,  when  I  went  up  to  the  cabinet,  reeling  with  fatigue, 
to  be  able  just  to  call  out  to  my  Lord  Liverpool,  and  to  the  members  of 
his  majesty's  government,  then  present,  that  all  was  well.  Then,  in  the 
following  week,  things  began  to  get  a  little  more  steady,  and  by  the  24th, 
"what  with  the  one  pound  notes  that  had  gone  out,  and  other  things, 
people  began  to  get  satisfied.  Then  it  was,  for  the  first  time  in  a  fort- 
night, that  those  who  had  been  busied  in  that  terrible  scene  could  recol- 
lect that  they  had  families  who  had  some  claim  upon  their  attention. 
It  happened  to  me  not  to  see  my  children  for  that  week." 

The  incidental  mention  to  one  of  the  directors  that  there  was  a  box  of 
one  pound  notes  ready  for  issue,  turned  the  attention  of  the  authorities 
to  the  propriety  of  attempting  to  circulate  them  ;  and  the  declaration  of 
Mr.  Henry  Thornton,  in  1797,  probably  occurred,  that  it  was  the  want 
of  small  change,  not  a  necessity  for  gold,  that  was  felt ;  and  as  the  pres- 
sure on  the  country  banks  arose  from  the  holders  of  the  small  notes,  it 
was  suggested  to  the  government  that  the  public  might,  perhaps,  receive 
one  pound  notes  in  place  of  sovereigns.  The  government  approved  of 
the  idea,  and  the  panic  was  at  its  height,  when,  on  Saturday,  the  iVth  of 
December,  1825,  the  bank  closed  its  doors,  with  only  £1,027,000*  in  its 
cellars,  f 

It  has  been  frequently  stated,  that  by  a  mere  accident  the  box  of  one 
pound  notes  was  discovered.     But  such  was  not  the  case.     Mr.  Richards 

*  The  changes  in  the  circulation  and  coin  of  the  bank  were  as  follows,  from  Feb- 
ruary, 1S23,  to  December,  1825: 

Circulation.  Coin  and  Bullion. 

1823,  Feb.  28, £  18,392,000  £  10,384,000 

1824,  Jan.  28, 19,736,000  14,200,000 

"      April, 19,200,000  13,800,000 

1825,  Feb.  28 20, '753,000  8,779,000 

"      Aug.  31, 19,398,000  3,534,000 

"      Dec.  3, 17,477,000  2,167,000 

"      Dec.  24, 25,709,000  1,024,000 

On  the  part  of  government  it  was  argued,  by  Lord  Liverpool,  the  chancellor  of 
the  exchequer,  Mr.  Huskissom  and  Mr.  Canning  :  "  The  monetary  crisis  which  this 
country  has  recently  undergone  is  evidently  owing  to  the  mad  speculation  of  the 
last  two  years ;  and  that  speculation  has  been  mainly  fostered  by  the  vast  increase 
in  the  issues  of  country  banker's  notes,  which  took  place  during  that  period  of  de- 
lusive prosperity.  In  1822,  before  the  mania  of  speculation  began,  the  stamps 
issued  for  country  bank  notes  were  about  £4,200,000  annually  ;  in  1824,  when  the 
mania  set  in,  it  rose  to  £6,000,000 ;  and  in  1825,  when  the  mania  was  at  its  height, 
it  amounted  to  no  less  than  £8,000,000  annually.  This  was  the  amount  of  stamps 
usually  issued  for  new  notes.  The  amount  actually  in  circulation  was  in  general 
about  fifty  per  cent,  more  at  each  period,  and  in  1825  amounted  to  £14,000,000. 
The  notes  of  the  Bank  of  England  had  also  increased  during  the  same  period,  but 
in  a  much  less  degree.  The  increase  in  that  quarter  was  only  £3,000,000 — from 
£19,000,000,  in  round  numbers,  to  £22,000,000.  The  great  increase  in  the  currency, 
therefore,  has  been  in  the  country  bankers'  notes ;  and  they  are  chargeable  with  all 
the  disasters  wliich  have  ensued.  The  only  way  to  prevent  a  repetition  of  the  evil, 
is  to  lay  the  axe  to  the  root  of  the  cause  from  which  it  sprung. — Alison's  Europe. 

\  In  the  pamphlet  lately  published  by  Lord  Asubukton  is  the  following  remark- 


Issue  of  One  Pound  Notes.  203 

said,  •'  he  did  not  recollect  that  there  were  any  one  pound  notes  ;  they 
were  put  by.  It  was  the  casual  observation  that  there  were  such  things 
in  the  house,  which  suggested  to  the  directors  that  it  would  be  possible 
to  use  them."  Application  was  made  to  government  for  permission  to 
issue  them;  and  this  was  granted,  subject  to  the  following  stipula- 
tions : 

"  If,  for  the  purpose  of  meeting  the  temporary  exigency,  occasioned 
by  the  sudden  withdrawal  of  the  country  banks'  small  notes,  the  bank 
are  disposed  to  avail  themselves  of  the  power  which  they  have,  by  law, 
to  issue  one  pound  notes,  the  government  will  not  object  to  it,  provided 
it  is  understood  to  be  strictly  temporary ;  and  provided  that  the  bank 
shall  take  the  opportunity  of  the  present  state  of  the  exchange  to  pro- 
cure a  greater  fund  of  treasure,  and  to  promote  a  more  extensive  circu- 
lation of  gold  in  the  country." 

The  delight  with  which  these  notes  were  received  in  the  country, 
proved  that  the  want  of  a  secure  small  currency  alone  was  felt.  The 
knowledge  that  the  provincial  banks  were  constantly  breaking,  that  the 
parent  banks  in  London  were  stopping  almost  as  frequently,  the  fear  that 
universally  prevailed  with  regard  to  those  that  were  really  solvent,  brought 
in  the  country  notes  with  that  rapidity  which  produced  the  fearful  failures 
of  so  many  of  the  body.  But  that  the  holders  only  required  to  be  safe, 
and  that  they  considered  the  notes  of  the  corporation  eminently  so,  is 
proved  from  the  fact  of  the  run  suddenly  stopping  after  their  intro- 
duction. 

In  Norwich,  the  Messrs.  Gukney  are  said  to  have  staid  the  plague  by 
merely  placing  a  thick  pile  of  one  pound  notes  of  the  Bank  of  England 
on  the  counter. 

"They  worked  wonders;"  said  Mr.  Harman;  "as  far  as  my  judgment 
goes,  they  saved  the  country."  In  most  of  the  provinces  they  were  re- 
ceived with  acclamation.  Within  a  week  from  their  issue  the  peril  and 
the  panic  had  passed  away,  and  the  moneyed  interest  had  time  to  look 
around  and  count  the  terrible  cost  of  the  yet  more  terrible  dangers  to 
which  they  had  been  exposed.  Seventy-three  town  and  country  bankers 
had  failed  in  one  month  ;  of  these,  ten  resumed  payment,  their  difficul- 
ties arising  solely  from  the  extraordinary  alarm  of  the  time. 

It  is  gratifying  to  add  the  opinions  of  such  men  as  the  late  Mr.  Roths- 
child, Mr.  George  Grote  and  Mr.  George  Carr  Glyn,  upon  the  con- 
duct of  the  bank  during  the  emergency.  Mr.  Rothschild  said,  "  At  the 
time  of  the  last  panic,  I  think,  there  was  a  great  deal  of  credit  due  to  the 
governor  of  the  bank."  On  another  occasion,  he  remarked,  "I  think  the 
bank  discounted  all  the  bills  sent  in  as  liberally  as  possible.  They  discount- 
ed everything."  Mr.  George  Grote  described  their  conduct  "  as  liberal 
and  daring  ;  but  as  judicious  as  proper."  Mr.  George  Carr  Glyn  as- 
serted that  "  the  commercial  public  were  exceedingly  indebted  to  them 


able  paragraph.  After  saying,  "  I  was  called  in  to  counsel  with  the  late  Lord  Liv- 
erpool, Mr.  HusKissoN  and  the  governor  of  the  bank,"  his  lordship  proceeds :  "  The 
gold  of  the  bank  was  drained  to  within  a  very  few  thousand  pounds;  for  although 
the  published  returns  showed  a  result  rather  less  scandalous,  a  certain  Saturday 
night  closed  with  nothing  worth  mentioning  remaining." 


204  History  of  the  Bank  of  England. 

at  that  time  ;  they  rendered  every  assistance  in  their  power."  Mr.  Att- 
wooD  "  gave  great  praise  to  the  bank  for  a  remarkable  degree  of  moral 
firmness  during  this  panic,  in  throwing  its  notes  out  into  circulation, 
which  prevented  a  catastrophe  so  distressing  that  be  would  not  attempt 
to  describe  it," 

As  a  proof  of  the  justice  of  these  opinions,  it  may  be  mentioned,  that 
on  the  8tli  December,  the  discounts  amounted  to  £7,500,000,  on  the 
15th  they  were  £11,500,000,  and  on  the  29th,  £15,000,000. 

In  looking  over  a  list  of  the  joint-stock  companies  formed  during  this 
eventful  period,*  the  names  which  appear  in  the  lists  of  directors  are  re- 
markable. The  greatest,  the  richest  and  the  most  honorable  in  the  city, 
in  some  ;  in  others,  persons  who  were  borne  by  the  bubbles  to  the  sur- 
face, but  have  now  sunk  to  their  original  nothingness.  Mines  were  pro- 
posed in  all  parts  of  the  world.  One  was  issued  at  a  premium  avowedly 
for  the  benefit  of  the  projector.  Another  was  celebrated  "  for  having  a 
vein  of  tin  ore  in  its  bottom,  as  pure  and  solid  as  a  tin  flagon."  A  third 
was  pronounced  by  the  directors  as  "  no  speculative  undertaking — no 
problematic  or  visionary  scheme — it  was  founded  on  a  sure  and  perma- 
nent basis,  adopted  after  months  of  mature  consideration,  after  inquiry, 
surveys,  investigations  and  reports ;"  and  this  Avas  dissolved  almost 
immediately.  Another  declared  that  "  lumps  of  pure  gold,  weighing 
from  two  to  fifty  pounds,  were  totally  neglected,"  and  that  its  mines  alone 
would  yield  "considerably  more  than  the  quantity  necessary  for  the  sup- 
ply of  the  whole  world."  The  romantic  aspect  of  the  land  was  described 
in  a  fifth  ;  while  a  sixth,  proposing  to  supply  England  with  granite,  la- 
mented, in  plausible  and  poetic  strain,  the  "  soft  and  perishable  materials" 
of  the  buildings  of  "the  mighty  head  of  a  mighty  empire."  Innumera- 
ble laborers  and  artisans  were  to  be  employed,  "  and,"  continued  the 
prospectus,  "perhaps  to  the  efforts  of  this  company  the  dingy  brick 
fronts,  the  disgrace  of  the  metropolis,  may  give  way  to  more  durable  and 
magnificent  elevations,  worthy  of  the  throne  of  the  queen  of  isles." 

An  utter  ignorance  was  shown  of  the  capability  of  the  countries  in 
which  many  of  the  mines  were  to  be  worked.  Expensive  machinery  was 
exported.     Liberal  salaries  were  given  to  every  individual  connected  with 

*  Parliament  aided  in  giving  a  tone  to  the  mania  of  the  year  1824.  At  the  opening 
of  Parliament,  Lord  Dudley,  in  his  response  to  the  king's  speech,  said,  "Our  pre- 
sent prosperity  is  a  prosperity  extending  to  all  orders,  all  professions  and  all  dis- 
tricts ;  enhanced  and  invigorated  by  the  flourishing  state  of  all  those  arts  which 
minister  to  human  comfort.  *  *  AVe  have  now  been  fully  taught  that  the 
great  commercial  prosperity  of  England  has  arisen,  not  from  our  commercial  restric- 
tions, but  grown  up  in  spite  of  them." 

"  Agricultural  distress  (said  the  Annual  Register)  had  disappeared.  *  *  This 
SUBSTANTIAL  and  SOLID  prosperity  was  stimulated  to  an  additional  extent  by  the  opera- 
tions of  the  many  joint-stock  banks  and  companies  which  had  sprung  into  sudden 
existence  in  the  former  year.  *  *  As  these  speculations  still  retained  their 
popularity,  the  apparent  prosperity  arising  from  their  artificial  stimulus  presented 
an  imposing  aspect,  and  augmented  the  general  enchantment." 

Even  the  "  Quarterly  Review'  became  a  convert  to  the  belief  that  this  sudden 
prosperity  was  real,  not  visionary.  "The  increased  wealth  of  the  middle  classes  is 
so  obvious,  that  we  can  neither  walk  the  fields,  visit  the  shops,  nor  examine  the 
workshops  and  storehouses,  without  being  deeply  impressed  with  the  changes  which 
a  few  years  have  produced." — See  Quarterly  Review,  1824. 


Mr.  Canning's  Description.  205 

the  speculations,  and  Cornish  miners,  tempted  by  high  wages  and  higher 
promises,  wandered  across  the  Andes,  or  tried  a  fell  with  the  gigantic 
condor  on  the  "  wide,  desert  plain  of  Villa  Vicencia,"  as  Captain  Head, 
sent  out  on  some  such  expedition,  amusingly  relates. 

But  other  companies  besides  mining  ones  found  support.  When 
the  bubble  burst  it  was  made  manifest  that  an  extensive  plan  of  gambling 
and  fraud  had  been  carried  on.  The  old  system — for  even  in  defrauding 
there  is  nothing  new — was  adopted.  Newspaper  puff's,  reports  and  pros- 
pectuses, raised  many  of  the  companies  to  a  high  premium.  When  the 
shares  were  sold  the  compan}'  dissolved,  and  the  projectors  sought  new 
schemes  and  new  dupes.  One  member  of  Parliament  was  stated  to  have 
been  the  director  of  nine  companies.  "The  press,"  says  the  editor  of  the 
*'  Morning  Chronicle,^''  *'  for  the  most  part  by  taking  shares  in  these 
schemes  when  at  a  premium,  (and  we  blush  to  say  few  editors  of  news- 
papers in  the  metropolis  are  not  to  be  found  in  the  list  of  those  who  bene- 
fited by  them,)  had,  at  all  events,  no  particular  interest  in  opening  the 
eyes  of  the  public."  In  one  company,  the  two  principal  charges  were 
the  payments  of  newspaper  puffs  and  legal  expenses. 

To  read  many  of  the  prospectuses,  it  appeared  only  necessary  to  cut  a 
canal,  and  it  would  be  laden  with  barges,  bearing  the  industrial  produce 
of  the  country ;  and  only  necessary  to  send  miners  to  some  place  with  an 
unpronounceable  name,  and  gold  would  attend  every  touch  of  the  labor- 
er's implements.  "The  Mississippi  scheme,"  says  a  writer  of  the  day, 
"  was  a  rational  project  compared  with  the  extravagance  of  the  expecta- 
tions held  by  whole  armies  of  speculators.  The  sea  was  to  contribute  its 
proportion,  and  treasures,  Avhich  had  been  buried  for  ages,  were  called 
from  *  the  vasty  deep '  by  the  magic  and  resistless  power  of  steam.  In 
this  universal  mania  men  hazarded  the  savings  of  a  long  life  of  industry ; 
they  gazed  only  on  the  bright  side  of  the  future  ;  they  shut  their  eyes  to 
the  reverse.     In  their  region  the  sun  never  set." 

Mr.  Hughes,  in  his  "History  of  England,"  says  that  the  joint-stock 
companies  which,  in  the  plenitude  of  their  imaginary  power,  would  have 
contracted  to  throw  a  bridge  across  the  channel,  or  make  a  tunnel  to  the 
antipodes,  were,  for  the  most  part,  in  the  Gazette,  without  a  single  sub- 
scriber, or  an  available  shilling.  "  They  fixed  the  public  gaze,"  said  Mr, 
Canning,  in  one  of  his  brilliant  orations,  "  and  excited  the  public  avidity 
so  as  to  cover  us,  in  the  eyes  of  foreign  nations,  if  not  with  dis|p:ace,  at 
least  with  ridicule.  They  sprung  up  after  the  dawn  of  the  morning,  and 
had  passed  away  before  the  dews  of  the  evening  descended.  They  came 
over  the  land  like  a  cloud  ;  they  rose  like  bubbles  of  vapor  towards  the 
'heavens,  and,  destroyed  by  the  puncture  of  a  pin,  they  sunk  to  the  earth 
and  were  seen  no  more." 

It  was  openly  declared  that  a  member  of  Parliament  received  £500 
a  year  from  each  of  two  companies,  for  the  protection  of  their  rights. 
Some  senators,  for  supporting  gas  companies,  had  their  houses  lighted 
for  nothing,  while  shares  which  bore  a  good  premium  were  allotted  to 
others,  for  their  assistance  in  the  Commons. 

From  the  pamphlets  of  Mr.  English,  published  in  1827,  the  following 
list  of  companies  are  copied,  that  the  reader  may  form  some  idea  of  the 
enormous  nature  of  the  proposed  speculations  : 
14 


206 


History  of  the  Bank  of  England. 


Amaunt 


Present.      Amount  liahle 


Existing.  Capital.  paid.  value.  to  he  called. 

44  MiniDgcom's,£26,7'76,000  ..£5,455,100  £2,927,350   £21,320,900 
20  Gas  do.     9,061,000  . .    2,162,000  . .  1,504,625  . .    6,899,000 

14  Insurance  do.  28,120,000  . .    2,247,000  . .  1,606,000  . .  25,873,000 
49  Miscellaneous,  38,824,600  . .    5,321,850  . .  3,265,975  . .  33,502,750 


127 


Abandoned.                                     Capital.  Amount  p)aid, 

16  Mining  companies, £5,585,000     ..  £400,900 

9  Investment      do 8,550,000     . .  746,000 

20  Canal,  rail-road,  <fec.,  companies,       19,135,000     ..  393,375 

80  Steam  companies, 2,927,500     . ,  79,900 

43  Miscellaneous  companies, 20,409,000     . .  .      799,500 

118  Companies, £56,606,500     ..  £2,419,675 

Projected.  Capital. 

14  Mining  companies, £  6,009,000 

9  Gas                 do 3,016,000 

19  Investment    do 44,050,000 

6  Insurance       do 7,700,000 

11  Trading          do 10,450,000 

26  Building         do 13,781,000 

18  Dock,  canal,  die,  companies, 13,851,000 

16  Rail-road                     do 11,065,000 

37  Steam                          do 5,628,000 

23  Provision                     do 8,360,000 

57  Miscellaneous             do 19,700,000 


236 


Capital 
required. 

£102,781,600 


General  Summaet. 
127  Companies  now  existing,. 

118         do.         abandoned, 56,606,500 

236         do.         projected 143,610,000 

143         do.        projected,  (No.  2,) 

not  particularized, 69,175,000 


£  143,610,000 

Amount  actually 
advanced. 

£15,185,950 
2,419,675 


624 


£372,173,100 


£  17,605,625 


Amount 
of  shares. 

358,700 
152,140 
545,000 
562,500 


£102,781,600  £15,185,950   £9,303,950  £  87,595,650  ..  1,618,340 


Niimber 
of  shares. 

98,200 
78,500 

246,000 
35,650 

390,250 

848,600 

Numljer 
of  shares. 

80,300 

48,800 
608,000 
106,000 

85,000 
164,900 
164,410 
131,800 

89,570 
674,000 
382,600 

2,535,380 

Xuml)er 
of  shares. 

1,618,340 

848,600 

2,535,380 

959,000 

5,901,320 


Nor  will  tlic  accompanying  list  of  foreign  loans,  contracted  for  in  1824 
and  182^,  be  less  interesting  to  the  reader : 

FOREIGN  LOANS  COXTRACTED  FOR 

JSfominal 
In  1824.  capital. 

Austria,  five  per  cent., £  3,500,000 

Brazil,                do 1,200,000 

Portugal,            do 1,500,000 

■Greece,              do 800,000 

Columbia,  six  per  cent., 4,750,000 

Buenos  Ayres,  do 1,000,000 

Mexico,  five  per  cent., 3,200,000 

Peru,  six  per  cent., 750,000 

Naples,  five  per  cent., 2,500,000 


£19,200,000 


Contract 

Money 

price. 

advanced. 

.      821     . 

.    £2,887,500 

.     75       . 

900,000 

,     87       . 

1,305,000 

59       . 

472,000 

.     88i     . 

4,203,750 

.     85       . 

850,000 

.     58       . 

1,856,000 

.     77       . 

577,500 

.     92.}     . 

.        2,312,600 

£15,364,250 

General  Distress.  207 

Xominal  Contract  Money 

In  1825.  Cajiital.  price.  advanced. 

Brazil,  five  per  cent., £2,000,000  ,.85  ..  £1,700,000 

Mexico,  six  per  cent., 3,200,000  ..     89|  ..  2,872,000 

Greece,  five  per  cent., 2,000,000  ..     56^  ..  1,130,000 

Denmark,  three  per  cent., 3,625,000  ..     75^  ..  2,718,750 

rem,  six  per  cent 010,000  . .     78  . .  480,480 

Guatemala,  six  per  cent., 1,428,571  ..73  ..  1,042,988 

£12,809,571  £9,944,218 

Summary.  Capital.  Amount  advanced. 

Foreign  loans  of  1824, £19,200,000         £15.304,250 

Do.         do.       1825, 12,809,571         9,944,218 

Total £32,069,571         £25,308,408 

At  the  time,  tlic  panic  was  generally  traced  to  the  issues  of  the  country 
bankers.  The  feet  is  unquestionable  that  their  circulation  was  enormously 
increased ;  and  it  is  equally  so  that  the  misery  of  the  provincial  popula- 
tion was  painful  in  the  extreme,  from  the  failure  of  so  many  of  the  body. 
It  is  impossible  to  imagine  the  aggregate  wretchedness  which  this  must 
have  occasioned.  Domestic  distress,  tics  broken,  families  disunited,  these 
were  the  individual  fruits  which  resulted  from  houses  being  permitted  to 
circulate  to  any  extent  notes  which,  in  many  instances,  proved  only  valua- 
ble as  waste  paper.  The  cause  which  had  operated  to  increase  the  coun- 
try circulation  was  the  first  departure  from  the  principles  of  Mr.  Peel's 
currency  bill,  and  whether  it  occasioned  or  not,  it  at  least  aggravated  the 
evil  to  an  enormous  degree. 

It  was  a  farther  proof  that  the  currency  of  the  country  should  have 
been  in  the  hands  of  a  bank,  the  solidity  of  which,  says  Adam  Smith,  is 
equal  to  that  of  government.*  To  preserve  our  social  system  we  levied 
taxes,  declared  war,  chose  senators,  held  courts  of  justice,  and  yet,  up  to 
1825,  any  person  calling  himself  a  country  banker,  though  in  some  in- 
stances not  rising  above  the  level  of  a  small  trader,  was  allowed  to  issue, 
to  an  illimitable  extent,  the  very  notes  which  penetrated  through  and  in- 
fluenced every  grade  of  social  life.  The  great  bank  of  the  empire  was 
constantly  called  on  for  rcturn.s,  lest  its  governors  should  be  too  liberal 
with  their  paper,  while  the  pettiest  banker  in  the  provinces  was  only  self- 


*  Ministers  carried  their  measures  by  an  overwhelming  majoritj';  Mr.  Baring's 
amendment,  that  "  it  is  not  expedient,  in  tiie  present  disturbed  state  of  public  and 
private  credit,  to  enter  upon  the  consideration  of  the  banking  sj-stem  of  tiie  coun- 
try," having  been  lost  by  a  majority  of  19;},  the  number  being  232  to  39.  In  the 
House  of  Lords  the  preponderance  was  ecpially  great,  the  numbers  being  so  decisive 
that  the  matter  was  not  pressed  to  a  division.  The  prohibition  to  issue  £2  and  £1 
notes  was  at  the  same  time  extended  to  the  Bank  of  England,  by  a  majority  of  06 
to  7,  in  tlie  face  of  a  protest  by  Mr.  Gurxev,  that  "  if  government  destroyed  all  the 
country  bankers'  notes,  and  at  the  same  time  stopped  tlie  issue  of  small  notes  by  the 
Bank  uf  England,  they  would  leave  the  country  in  a  state  of  dctitution  of  which  they 
could  form  no  adcnuate  conception."  This  observation  produced  no  sort  of  impres- 
sion, and  it  passed  into  a  law  that  stamps  for  £2  and  £1  notes  should  no  Ioniser  be 
issued  either  to  tiie  Bank  of  England  or  country  banks,  and  that,  at  the  expiration 
of  three  years  from  March,  1820,  that  is,  in  ilarch,  1829,  their  circulation  should  be 
prohibited  altogether  in  England. — Alison's  Europe. 


208  History  of  the  Hank  of  England. 

controlled.  The  result  is  evident.  Seventy  country  banks  failed,  and 
the  poor  man,  whose  time  is  money,  was  told  in  the  House  of  Commons, 
with  a  refinement  of  cruelty,  that  he  ouoht  to  have  deposited  his  earnings 
in  a  savings  bank,  "  when,"  said  Mr.  Peel,  in  a  few  indignant  words 
which  spoke  volumes  for  the  inefficiency  of  the  present  system,  the  "  sav- 
ings bank  was  perhaps  twenty  miles  from  his  home." 

The  following  opinions,  as  to  the  cause  of  the  panic,  are  important  in 
proving  the  difficulty  of  arriving  at  a  just  conclusion,  or  interesting,  as 
they  evince  the  bias  of  each  speaker,  springing  either  from  his  predeter- 
mined notions,  or  from  the  natural  prejudices  of  his  position.  Three 
out  of  the  four  unftworable  to  the  corporation  were  country  bankers,  or 
dii'cctors  of  joint-stock  banks.  To  Mr.  Wilkins,  a  provincial  banker 
and  an  issuer  of  paper,  great  praise  is  due  for  the  honesty  which  pro- 
duced an  avowal  contrary  to  his  own  advantage  ;  and  so  much  at  vari- 
ance with  the  general  opinions  of  the  interest  he  represented. 

Mr.  GuKNEY  considered  it  impossible  to  define  the  whole  of  the 
causes  of  that  very  remarkable  crisis  ;  but  it  certainly  was  not  the  over- 
issue of  the  country  bankers.  lie  believed  that  every  thing  which  caused 
great  facility  in  money  transactions  tended  that  way ;  and  that  the  great 
reduction  in  the  duties  on  many  foreign  articles  of  production,  contrib- 
uted to  it.  Mr.  Stuckey  thought  that  it  arose  mainly  from  an  over- 
issue of  the  Bank  of  England  paper,  while  Mr,  Wilkins  gave  it  as  his 
opinion  that  the  distress  and  failures  of  the  period  were  owing  to  the 
excessive  issue  of  the  country  bankers. 

Mr.  Rothschild  thought  it  might  be  assisted  by  the  great  speculation 
in  different  articles ;  an  immense  amount  of  bills  had  been  drawn  upon 
this  country  from  almost  every  quarter,  of  which  he  received,  in  two 
months,  from  a  million  to  a  million  and  a  half  sterling.  An  immense 
deal  of  specie  had  been  sent  to  the  continent  to  take  up  those  bills. 
When  the  bank  found  that  gold  was  going  away,  they  would  not  dis- 
count. There  was  an  immense  deal  of  speculation  in  corn,  and  the  bank 
refused  to  discount  the  corn  and  other  bills.  Mr.  Dyer  believed  that 
the  bank  had  been  the  cause  of  the  panic,  and  of  a  constant  succession  of 
little  panics,  continually  annoying  the  commerce  of  the  country.  Mr. 
Burt  was  of  opinion  that  the  crisis  was  first  caused  by  the  Bank  of 
Enoland ;  and  afterwards  the  bank  remedied  it  in  the  best  way  it  could. 
The  opinion  of  Mr.  Palmer  is  presented  at  length,  because  it  enters 
more  calmly  into  the  question,  and  because,  from  his  position,  he  could 
best  afford  to  regard  it  in  a  dispassionate  light : 

"  I  have  always  considered  that  reduction  of  interest,  one-fifth  in  one 
case  and  one-eighth  in  the  other,  to  have  created  that  feverish  feeling  in 
the  minds  of  the  public  at  large,  which  prompted  almost  every  body  to 
entertain  any  proposition  for  investment,  however  absurd,  which  was 
tendered.  The  excitement  of  that  period  was  farther  promoted  by  the 
acknowledgment  of  the  South  American  republics,  by  this  country,  and 
the  inducements  held  out  for  engaging  in  mining  operations,  and  loans  to 
those  governments,  in  which  all  classes  of  the  community  in  England 
seem  to  have  partaken.  Almost  simultaneously  with  those  speculations 
arose  o-eneral  speculation  in  commercial  produce,  which  had  an  effect  of 
disturbing  the  relative  values  between  this  and  other  countries,  and.  ere- 


Scarcitij  of  Money.  209 

ating  an  unfavorable  foreign  excliange,  which  continued  from  October, 
1824,  to  November,  1825,  causing  a  very  considerable  export  of  bullion 
from  the  bank — about  seven  millions  and  a  half.  The  bank  were,  even 
at  the  latter  period,  sufficiently  provided  with  bullion  for  their  own  pur- 
poses ;  and  had  it  not  been  for  the  internal  demands  to  which  I  have 
alluded  in  the  former  part  of  my  evidence,  would  have  weathered  the 
storm." 

Mr.  Richards  thought  that  the  reduction  of  interest  by  the  govern- 
ment, and  that  the  statements  made  in  the  royal  speech  of  the  unbounded 
prosperity  of  the  country,  had  buoyed  up  the  public  mind,  and  that  "  the 
bank  had  continued  then,  as  it  always  invariably  did,  as  steady  a  course 
as  it  was  possible  for  a  body  of  that  magnitude,  moving,  at  best,  but 
slowly,  as,  from  necessity,  it  must  move,  to  have  done." 

To  the  judgment  of  the  reader  must  be  left  the  task  of  reconciling 
these  conflicting  views.  They  have  been  presented  at  some  length,  be- 
cause the  importance  of  the  period  demands  an  extensive  inquiry. 

From  the  failure  of  so  many  private  bankers,  a  great  number  of  ac- 
counts were  transferred  to  the  Bank  of  England.  Up  to  1826,  £10  had 
been  the  lowest  sum  allowed  to  be  drawn  ;  but  this  was  reduced  to  ^£5, 
to  facilitate  business.  On  the  l7th  December  government  raised  the  in- 
terest on  exchequer  bills  to  2d.  per  cent,  per  diem.  A  message  was  for- 
warded to  the  India  house  requesting  a  postponement  of  the  indigo  sale 
for  three  or  four  months ;  and,  at  the  desire  of  some  influential  gentle- 
men, one  public  sale  was  actually  delayed  on  the  plea  that,  however  re- 
sponsible the  buyers  might  imagine  themselves,  it  was  impossible  to 
know  whether  they  would  be  able  to  pay  for  the  goods  they  bought. 
While  all  the  other  banking  houses  were  in  a  state  of  trepidation,  the 
"  Courier''''  remarks,  that  Messrs.  Coutts  &  Co.  had  not  a  single  check 
drawn  upon  them  more  than  was  warranted  by  the  ordinary  demand  of 
business. 

The  manufacturing  and  trading  interests  felt  the  depression  long  after 
the  cause  had  ceased.  Money  was  so  scarce  with  the  former,  that  large 
orders,  which  arrived  from  Germany,  were  unable  to  be  executed.  One 
house,  carrying  on  an  extensive  business,  sent  an  agent  to  collect  debts 
in  the  north,  to  the  amount  of  £80,000.  After  an  absence  of  six  weeks 
he  returned  from  his  tour  with  no  more  than  £500.  An  application  for 
assistance,  founded  on  this  distress,  was  made  to  government.  Mr.  Wil- 
son, member  for  the  city,  said,  that  the  difficulties  demanded  attention. 
The  relief  he  asked  for  might  be  granted  with  safety.  Cotton  had  fallen 
from  12d.  to  6d.  per  pound,  and  no  sales  could  be  effected.  What  risk 
would  there  be  in  advancing  3d.  per  pound  ?  Yet  such  an  advantage 
would  save  many  a  merchant  from  ruin,  and  prevent  hundreds  of  ope- 
ratives of  being  thrown  out  of  employment,  and  would  be,  therefore,  of 
the  utmost  importance. 

The  reply  of  Mr.  Robinson,  chancellor  of  the  exchequer,  was  that  a 
compliance  with  this  proposition  would  be  attended  with  consequences 
more  prejudicial  than  the  relief  would  be  serviceable.  "But,"  he 
added,  "  if  government,  by  administering  any  relief  in  the  money  mar- 
ket, could  tender  any  effectual  assistance,  it  would  be  found  most  ready 
and  willing  to  do  so.     If,  for  instance,  in  the  absorption  of  the  exchequer 


210  History  of  the  Bank  of  Ewjland. 

bills,  by  the  purchase  of  them  by  tlie  bank,  any  pressure  of  that  kind 
could  be  removed,  government  would  be  most  happy  in  forwarding  such 
a  measure."  After  some  negotiation  between  the  Bank  of  England  and 
the  ministry,  the  following  -was  addressed  to  the  governor  and  deputy- 
governor  : 

"Gentlemen, — Under  all  the  circumstances  of  the  present  distress  in 
the  city  and  country,  it  appears  to  us  that  it  would  be  advantageous,  with 
a  view  to  public  and  private  credit,  if  the  bank  were  to  give  directions 
for  the  purchase  of  exchequer  bills  to  the  amount  of  £2,000,000.  If  the 
bank  shall  agree  to  this  proposal,  we  engage  to  submit  to  Parliament  the 
necessary  measures  for  the  repayment  of  the  same  between  this  period 
and  the  14th  June  next. 

''  We  have  the  honor  to  be,  gentlemen, 

*'  Your  most  obedient  servants, 
"  Liverpool, 
*'  Frederick  John  Robinson." 

It  was  therefore  resolved,  "  That  the  governor  be  authorized  to  pur- 
chase exchequer  bills  to  an  amount  not  exceeding  £2,000,000,  on  condi- 
tion that  the  repayment  be  made  within  four  months," 

As  a  conclusion  to  this  chapter,  and  as,  perhaps,  the  true  origin  of  the 
crisis  is  here  stated,  the  following,  from  the  pen  of  one  who,  if  he  had  not 
had  riches  "  thrust  upon  him,"  would,  in  all  probability,  have  been  a  great 
man,  instead  of  being  simply  a  great  banker,  is  well  worthy  an  attentive 
perusal.  There  is  the  finest  of  all  philosophies,  the  philosophy  of  nature, 
in  the  remark.  "  The  history  of  what  we  are  in  the  habit  of  calling  the 
'  state  of  trade'  is  an  instructive  lesson.  We  find  it  subject  to  various 
conditions  which  are  periodically  returning ;  it  revolves  apparently  in  an 
established  cycle.  First  we  find  it  in  a  state  of  quiescence — next  improve- 
ment— growing  confidence — prosperity — excitement — over-trading — con- 
vulsion— pressure — stagnation — distress — ending  again  in  quiescence." 

Note. — It  was  not  proposed,  in  the  first  instance,  (1825-1 826,)  to  extinguish  small 
notes  in  Scotland,  but  the  known  opinions  of  government,  and  the  course  of  ex- 
amination by  the  adherents  of  administration  of  the  witnesses  who  were  questioned 
on  the  subject  in  committees  of  both  Houses  of  Parliament,  left  no  room  for  doubt 
that,  in  the  next  session  at  latest,  the  law  would  be  made  the  same  in  both  ends  of 
the  island,  and  that  the  fate  of  Scotch  and  Irish  notes  would  be  sealed.  In  this  ex- 
tremity was  seen  what  can  be  effected  by  the  vigor  and  patriotism  of  one  man.  As 
soon  as  it  was  known  in  Edinburgh  that  the  Scotch  notes  were  seriously  threatened, 
there  appeared  in  the  columns  of  the  Weekly  Journal,  a  paper  conducted  by  the 
Messrs.  Ballantyne,  a  series  of  papers  on  this  subject,  signed  "  Malachi  Malageow- 
THER,"  in  which  the  public  soon  recognised  the  vigor,  sagacity,  and  fearless  deter- 
mination of  Sir  "Walter  Scott.  Albeit,  closely  connected  both  by  political  princi- 
ple and  private  friendship  with  the  administration,  that  great  man  did  not  hesitate 
a  moment  to  break  off  from  them  on  this  momentous  question,  and  to  sacrifice  both 
a  sense  of  past  obligations  and  the  hopes  of  future  preferment  on  the  altar  of  patri- 
otic duty.  His  efforts  were  crowned  with  entire  success.  Scotland  rose  as  one  man 
at  the  voice  of  tlie  mighty  enchanter;  petitions  against  the  threatened  change 
crowded  in  from  all  sides  and  the  most  influential  quarters.  Ireland  followed  in  the 
wake  of  its  more  energetic  and  far-seeing  rival;  and  in  the  end  ministers  gave  a  re- 
luctant consent.  The  decisive  words  were  at  length  wrung  from  Mr.  Huskisso:^, 
"  Well,  let  them  keep  their  rags,  since  they  will  have  them." — Alison's  Europe. 


Branch  Banks  Suggested.  211 


CHAPTER  XIX. 

EFFECTS   OF     THE     PANIC     OF     DECEMBER,     1825 ALTERATION     IX     TUE  CHARTER PARLIA- 
MENTARY   DEBATES OPINIONS    ON     THE     CURRENCY ASSISTANCE     TO     THE    MERCANTILE 

INTEREST — TABLE     OF     ADVANCES LEGAL     DECISION EXTENSION    OF    THE    BRANCHES 

JEALOUSY    OF    THE   COUNTRY    BANKERS NEW    3^    PER    CENTS. USES    OF   BANK   NOTES 

DANGER    OF    THE    BANK ITS  ORIGIN RUN    UPON  THE  BANK  IN  1832 POLITICAL    CAUSES 

DUKE    OF   "WELLINGTON. 

The  crisis  of  1825,  which,  it  has  been  seen,  produced  an  effect  so  ex- 
traordinary as  to  be  paralleled  by  no  personal  recollection,  induced  a 
searching  inquiry  into  the  cause.  Many  opinions  were  published,  and 
almost  every  man  had  his  theory.  The  Bank  of  England  was  denounced 
by  a  few  ;  and  the  over-issue  of  the  country  bankers  by  many.  By  some 
the  company  was  considered  the  shield,  by  others  as  the  destroyer  of 
national  credit ;  and  a  most  important  effect  was  produced  to  the  corpo- 
ration through  the  panic,  as  a  negotiation  was  opened  by  the  government 
in  which  they  expresed  their  desire  of  establishing  the  banking  system 
on  a  firmer  foundation.  In  January  a  correspondence,  of  which  the  fol- 
lowing is  an  analysis,  passed  between  the  governor  and  deputy-governor 
with  the  first  lord  of  the  treasury  and  the  chancellor  of  the  exchequer. 
After  stating  that  the  principal  cause  of  the  recent  distress  was  to  be 
traced  to  the  rash  spirit  of  speculation,  supported,  fostered,  and  encour- 
aged by  the  private  banks,  the  paper  proceeds : 

"  The  remedy  for  this  evil  must  be  found  in  an  improvement  of  the 
circulation  of  the  country  paper ;  and  the  first  measure  that  has  suggested 
itself  to  most  of  those  who  have  considered  the  subject,  is  a  recurrence  to 
gold  circulation  throughout  the  country,  by  a  repeal  of  the  act  which  per- 
mits country  banks  to  issue  one  and  two  pound  notes  until  the  year  1833, 
and  by  the  immediate  prohibition  of  any  such  issues  at  the  expiration  of 
two  or  three  years  from  the  present  period."  After  saying,  "  we  believe 
that  much  of  the  prosperity  of  the  country  for  the  last  century  is  to  be 
attributed  to  the  general  wisdom,  justice  and  fairness  of  the  dealings  of 
the  bank,"  they  proceeded  to  state,  "  There  appear  to  be  two  modes  of 
obtaining  a  sound  system  of  banking  throughout  the  country.  1st.  That 
the  Bank  of  England  should  establish  branches  of  its  own  in  different 
parts  of  the  country,  2d.  That  the  bank  should  give  up  its  exclusive 
privilege  as  to  the  number  of  partners  engaged  in  banking  except  within 
a  certain  distance  of  the  metropolis.  With  regard  to  the  first,  it  would 
be  quite  impossible,  under  present  circumstances,  for  the  bank  to  carry 
into  execution  such  a  system  to  the  extent  necessary  for  providing  for 
the  wants  of  the  country.  There  remains,  therefore,  the  other  plan — the 
surrender  by  the  bank  of  their  exclusive  privilege,  as  to  the  number  of 
partners  beyond  a  certain  distance  from  the  metropolis." 

It  was  indicated  that  if  the  bank  should  demand  a  renewal  of  their 
charter  from  1833  as  the  price  of  this  concession,  it  would  not  be  al- 
lowed.     "  Such   privileges,"   w^as   the   ominous   remark,  "  are   out   of 


212  History  of  the  Bank  of  England. 

fashion."  "  It  is  to  be  hoped  that  the  bank  will  make  no  difficulty  in 
giving  up  their  exclusive  rights,  in  respect  to  the  number  of  partners  en- 
gaged in  banking,  as  to  any  district miles  from  the  metropolis." 

The  reply  of  the  directors  was  to  the  point ;  and  the  last  paragraph, 
containing  the  result,  was  as  follows  : 

"  Under  the  uncertainty  in  which  the  court  of  directors  find  them- 
selves with  respect  to  the  details  of  the  plnns  of  government,  and  the 
effect  which  they  may  have  on  the  interests  of  the  bank,  this  court  can- 
not feel  justified  in  recommending  to  their  proprietors  to  give  up  the 
privilege  which  they  now  enjoy,  sanctioned  and  confirmed  as  it  is  by  the 
solemn  acts  of  the  legislature."  In  return  to  this,  the  government  said, 
"  that  they  were  quite  willing  to  remove  this  uncertainty,  but  against  any 
proposition  for  compensation  they  formally  protested.  If  the  bank,  how- 
ever, should  be  of  opinion  that  this  ought  to  be  accompanied  with  other 
concessions,  and  that  it  should  not  be  made  without  them,  it  was  for  the 
bank  to  bring  forward  such  conditions." 

On  this  point  the  bank  committee  came  to  a  resolution  of  which  the 
following  is  an  abstract:  "That  the  committee  of  treasury  of  the  Bank 
of  England  had  taken  into  consideration  the  paper  of  the  23d  instant, 
from  the  Earl  of  Liverpool  and  the  chancellor  of  the  exchequer,  and,  find- 
ing that  ministers  persevered  in  the  restriction  of  their  exclusive  privi- 
leges, and  also  that  it  did  not  seem  likely  they  would  call  upon  Parlia- 
ment to  renew  these  privileges  after  the  present  term  of  their  charter,  as 
well  as  that  the  application  was  founded  upon  a  generally  received  notice 
of  its  public  benefit ;  finding  all  these  matters,  the  committee  of  treasury 
declared  their  readiness  to  recommend  to  the  court  of  directors  a  nego- 
tiation for  the  proposed  surrender  of  their  privileges,  founded  upon  the 
basis  of  the  act  of  Parliament,  which  stipulated  that  the  Bank  of  Ireland 
should  have  an  extension  of  its  charter  after  the  time  at  present  assigned 
by  law  ;  relinquishing  the  claim,  however,  to  a  prolongation,  upon  the 
condition  that  the  new  partnership  privilege  for  private  banks  should  not 
be  available  within  sixty-five  miles  (fifty  miles  was  the  Irish  act)  of  the 
metropolis,  and  should  make  proper  arrangements  for  individual  responsi- 
bility of  the  partners."  The  proposition  contained  in  the  above  resolu- 
tion was  accepted,  and  the  government  concluded  by  recommending  the 
establishment  of  branch  banks,  being  decidedly  of  opinion  that,  under 
proper  regulations,  they  would  be  highly  advantageous  to  the  bank  and 
the  community. 

A  general  meeting  of  the  proprietors  was  called  to  confirm  or  reject 
the  proposed  arrangement.  Opinions  were  very  much  divided.  One 
party  strongly  maintained  that  the  proposition  had  nothing  equal ;  that 
all  the  benefit  would  accrue  to  the  country  at  the  expense  of  the 
bank,  and  that  it  was  unjust  to  call  upon  them  to  lay  open  their  charter 
for  the  public  good,  without  an  adequate  recompense.  By  others  it  was 
urged,  that  it  would  not  huit  the  real  interests  of  the  bank ;  and  that  all 
the  exertions  of  the  directors  to  obtain  compensation  would  be  unavail- 
ing. The  agreement  was  confirmed  almost  unanimously ;  and  the  fol- 
lowing tribute  paid  to  the  management  of  the  corporation  during  the 
panic  :  "  That  this  court  desire  to  express  the  grateful  sense  they  enter- 
tain of  the  decision,  liberality  and  judgment  with  which  the  directors 


Country  Bankers.  213 

came  forward  in  support  of  public  credit  in  a  late  crisis  of  unexampled 
pressure  and  commercial  difficulty." 

On  the  10th  February,*  182C,  the  chancellor  of  the  exchequer 
moved,  "  That  all  promissory  notes  payable  to  the  bearer  on  demand, 
issued  by  the  Bank  of  England,  or  by  any  English  bankers,  and  stamped 
on  5th  February,  1826,  or  previously,  should  not  be  allowed  to  circulate 
beyond  the  5th  February,  1829,"  This  motion  was  carried  in  the  lower 
house,  the  members  of  which  entered  warmly  into  the  question  ;  but  the 
government  was  determined  to  prevent,  or  at  least  lessen  the  chance  of 
panics  for  the  future.  A  varied  and  eager  debate  ensued.  It  was 
asserted  that  in  all  great  commercial  countries  commercial  crises  like 
that  of  1825  had  occurred.  That  where  there  were  great  enterprises 
there  must  be  great  occasional  reverses.  "  It  would  be  impolitic  and  un- 
safe to  await  returning  prosperity,"  said  Mr.  Peel,  "  which  would  make 
the  country  banks  more  reluctant  to  agree  to  it,  and  more  able  to  oppose 
it.  It  appears  to  me  that  the  time  has  arrived  when  we  can  carry  the 
measure  into  effect ;  that  we  are  upon  the  brink  of  the  river,  that  the 
ford  is  passable,  and  that  if  we  permit  the  opportunity  of  taking  our 
passage  to  pass  by,  we  shall  imitate  the  folly  of  the  rustic,  who  waited  on 
the  bank  expecting  the  stream  would  pass  away." 

During  one  of  the  debates,f  Mr.  Baring  argued,  that  the  result  of  the 
measure  would  be  "  an  immediate,  sudden  and  precipitate  withdrawal 
from  circulation  of  one  pound  notes  of  the  country  banks."  It  was,  un- 
doubtedly, the  interest  of  these  gentlemen  and  of  the  country  to  spread 
the  diminution  over  as  great  a  space  of  time  as  was  practicable.  "  But," 
said  Mr.  Canning,  "  reports  have  reached  her  majesty's  ministers  from 
various  parts  of  the  country,  that  many  of  the  country  bankers,  in  viola- 
tion of  the  good  faith  which  persons  in  their  situation  ought  to  keep 
with  the  public,  have  begun  to  act  upon  the  principle  of  a  sudden  con- 
traction of  their  circulation."  This  gentleman  contended,  that  if  such  a 
practice  should  become  general,  and  the  Bank  of  England  be  deprived 
of  the  power  of  issuing  one  pound  notes,  the  same  species  of  crisis  would 
ensue  as  occurred  in  December.  To  meet  this  evil  it  was  arranged  that 
"  during  the  three  years,  when  the  notes  of  country  bankers  should  not 
be  issued,  unless  stamped  prior  to  5th  February,  the  notes  of  the  Bank 
of  England  should  continue  to  be  circulated,  though  stamped  up  til!  the 
10th  October." 

The  question  of  a  mixed  currency  was  mooted,  and  denounced  with 
great  force  by  many  of  the  members.     It  was  said  that  "  all  experience 

*  By  the  act  passed  in  February,  1826,  regarding  small  note?,  it  had  been  pro- 
vided, that  though  no  new  stamps  were  to  be  issued  for  small  notes  after  its  date, 
the  notes  already  in  circulation  were  to  continue  to  circulate,  and  be  received  as  a 
legal  tender  for  three  years  longer.  These  three  years  expired  in  March,  1829,  and 
all  notes  in  England  below  £5  immediately  disappeared  from  the  circulation.  Great 
was  the  effect  of  this  decisive  change  upon  the  fortunes  and  well-being  of  the  indus- 
trious classes,  both  in  town  and  countrj^,  over  the  whole  nation. — Alison's  E^irope, 
vol.  6,  p.  318. 

•j-  To  be  convinced  of  the  decisive  effect  which  the  destruction  of  small  notes, 
and  entire  founding  of  the  currency  on  gold,  has  had  on  the  future  destinies  of 
Great  Britain,  we  have  only  to  cast  our  eyes  on  the  table  below,  which  shows  the 


214  History  of  the  Bank  of  England. 

proved,  the  restoration  of  a  metallic  issue  could  not  be  effected  so  long  as 
small  notes  were  permitted  ;  that  wherever  there  was  a  paper  circulation 
of  the  same  denomination  as  the  metallic  currency,  the  coin  was  sure  to 
be  expelled  by  the  paper ;  and  it  was  argued,  again,  by  others,  that  a 
mixed  issue  would  be  more  beneficial,  in  many  respects,  than  a  purely 
metallic  one.  In  a  pamphlet,  published  some  years  afterwards,  entitled, 
"  The  Currency,  its  Laws,  Evils  and  Remedies,"  which  attracted  con- 
siderable attention  at  the  period,  it  was  said,  that  by  the  system  then  in 
operation,  "  whilst  money  was  becoming  scarce,  the  Bank  of  England 
sold  securities  to  mate  it  scarcer;  and  when  money  was  decreasing  in 
value,  and  becoming  plentiful,  the  Bank  of  England  bought  securities  to 
make  it  more  so."  "  Now,  however  much  that  is  to  be  regretted,"  con- 
tinued the  writer,  "  yet  the  bank  directors  are  absolutely  obliged  to  en- 
tail upon  the  commercial  community  all  the  evils  resulting  from  this 
course,  so  long  as  the  legislation  compel  them  to  pay  their  notes,  always 
on  demand,  for  gold. 

"  For  should  they  not  sell  securities  when  the  exchanges  are  adverse, 
they  would  not  be  able  sufficiently  to  lower  the  price  of  goods,  nor  would 
they  be  able  to  turn  the  exchanges  before  the  stock  of  gold  was  ex- 
hausted. But  if  the  bank  directors  are  obliged  to  sell  securities  on  an 
adverse  exchange,  they  must  be  compelled  to  purchase  the  securities 
back  again,  when  the  exchanges  are  favorable.     Because  if  they  did  not, 

immediate  effect  of  these  changes  on  the  prices  of  commodities,  and  the  speedy  re- 
sult of  their  decline  or  rise  in  inducing  or  preventing  political  change. — Alison's 
Europe,  voL  6. 

Amount  of  Paper  in  circulation,  the  Exports,  Imports  and  Revenue,  with  the  great 
c'langcs  in  Great  Britain  in  every  year  from  1818  to  1832,  both  inclusive: 

Banl-of          ^                                         %7nerd\f    E^Port«,  Import,, 

YW..Englana          ^^y           Total.       ^ZZet     ^-'«-^  ""^f"'  ^'''"''''■ 

^otes.                                                        at  bank.          *«^''«-  ''«^^'«- 
I81S, £26,202,150  ..£20,50T,000  ..£46,709,150  ..£5,113,748  ..£46,112,800  ..£36,885,182  ..£53,747,795 
Bank  Eestrietion  Act  passed  July  7, 1819. 

1819,  25,252,600..   15,701,328..    40,953,928..    6,321,402..    34,881,727..  30,776,810..  52,648,847 

1820,  24,299,340..    10,576,245..    84,875,785..    4,672,123..    36,126,322..  32,438,650..  54,282,958 

1821,  20,295,300..     8,256,160..    28,551,480..    2,772,587..   86,333,102..  30,792,760..  55,834,192 

1822,  17,464,790..      8,416,430..    25,881,220..    3,622,151..    86,650,039..  30,500,094..  55,663,650 

Small  notes  prolonged  for  ten  years,  July  7, 1822. 

1823,  19,231,240..     9,920,074..   29,151,314..   5,624,693..   36,375,342..   35,798,707..  57,672,999 

1824,  20,132,120..    12,831,352..   32,963,472..    6,255,343..    38,422,312..    37,552,935..  59,362,403 

1825,  19,898,840  . .   14,980,168  . .    39,379,008  . .    7,691,464  . .    38,870,851  . .    44,137,482  . .  57,273,869 

Small  notes  limited  to  three  years,  February  26, 1826. 

1826,  21,56.3,560..     8,656,101..   30,219,661..   7,369,749..   81,536,724..   37,686,113..   54,894,989 

1827,  22,747,600..     9,985,-300..   32,732,900..   3,389,725..   36,860,376..   44,887.774..   54,932,518 

1828,  21,357,510..    10,121,476..    31,478,986..    3,822,754..   36,483,323..    45,028,805..    55,187,142 
Catholic  emancipation  passed  April  13, 1827.— Small  notes  extinguished  February  26, 1829. 

1829,  19,547,380..  6,130,137..  27,877,517..  4,589,370..  35,522,627..  43,981,317..  50,786,682 
1880,  21,464,700..  7,841,396..  29,306,096..  3,654,071..  37,927,561..  46,245,241..  50,056,616 
1831,  18,538,630..  7,914,216..  26,452,846..  5,848,478..  36,859,738..  49,713,889..  46,424,440 
1882,  13,542,000..  8,221,895..    26,763,895..  3,247,169.,    36,133,098..  44,586,741..  46,988,755 

Eeform  Bill  passed  July,  1832.  i 

— PoETER,  third  edition,  pp.  356,  359,  360,  475.  Tooke  "  On  Prices,"  vol.  2,  pp. 
382,  383,  387,  389, 


Speech  of  Lord  Liverpool.  215 

on  the  next  adverse  exchange  they  would  have  less  power,  for  they  would 
have  less  securities  to  sell,  and  there  must  ultimately  come  a  time  when 
the  bank  shall  have  got  rid  of  all  its  marketable  securities,  and  then,  as 
a  manager  of  the  circulation,  it  would  exist  no  longer.  As  a  remedy  for 
this,  at  once  simple  and  effectual,  it  is  proposed  that  the  legislature  allow 
the  bank,  at  its  discretion,  to  issue  one  and  two  pound  notes. 

"  This  will  enable  the  bank  to  act  as  bullion  merchants.  When  the 
stock  of  bullion  has  decreased  by  five  millions,  for  example,  the  bank  di- 
rectors can  say  to  the  merchant,  as  they  do  now  when  he  comes  for  dis- 
count, '  Bullion  is  much  in  demand ;  we  are  purchasers  rather  than 
sellers,  but  you  can  have  it,  if  necessary  to  you,  at  £3  18s.  per  ounce.' 
Or,  in  other  words,  they  can  ask  such  a  price  for  gold  that  it  cannot  be 
exported  for  profit,  whilst  no  impediment  is  offered  by  the  price  charged 
to  the  legitimate  transactions  of  trade." 

Such  are  the  varying  opinions  of  clever  men  upon  the  subject  of  the 
circulation.*  But  the  diff'erence  of  creeds  on  the  topic  of  the  currency 
cannot  be  more  explicitly  expressed  than  in  the  following  commencement 
of  Mr.  Warde  Norman's  pamplilet :  "  Of  all  the  great  questions  that 
have  for  many  years  occupied  public  attention,  there  is  not  one  on  which 
opinions  have  prevailed  more  discordant,  or  less  reconcilable,  for  the 
most  part,  to  sound  principles,  than  the  important  subject  of  currency 
and  banking.  The  discussions  in  the  periodical  press,  which  on  other 
matters  have  so  greatly  tended  to  enlighten  and  instruct,  upon  these 
seem  calculated  almost  universally  to  darken  and  mislead." 

Mr.  Robinson  left  to  Lord  Liverpool,  in  the  upper  house,  the  task  of 
proposing  the  clause  by  which  the  Bank  of  England  were  to  establish 
branches  in  various  parts  of  the  empire,  and  submit  to  the  throwing  open 
their  charter  by  the  establishment  of  joint-stock  banks  with  more  than 
six  partners;  and  the  following  paragraph  expressed  the  feeling  which 
was  so  general  at  the  period.  Those  only  who  had  witnessed  the  fail- 
ures of  the  country  banks  could  appreciate  the  distress  occasioned  by 
them.  "  I  must  enter  my  protest,"  said  his  lordship,  "  against  the  pres- 
ent system,  where  you  allow  liberty  to  all  that  is  rotten  and  bad,  while 
your  restrictions  apply  only  to  what  is  solid  and  good.  Where  you  per- 
mit any  shoemaker,  grocer,  or  cheesemonger  to  establish  a  bank,  but 
where  more  than  six  respectable  persons  are  joined,  they  may  form  no  es- 
tablishment, if  the  crown  cannot  grant  them  a  charter."  "  There  is  one 
consolation,"  he  added,  "that,  if  we  are  to  be  liable  to  crises  of  great 
difficulty,  it  will  not  fall  exclusively  upon  those  least  able  to  support  them 
— the  poorer  classes  of  society.     I  am  drawing  no  imaginary  picture,  for 


*  What  the  legislature  should  have  done  in  1826  on  this  all-important  question  is 
sufficiently  obvious,  and  had  been  so  clearly  i^ointed  out  by  experience,  that,  had 
not  a  small  but  influential  portion  of  the  community,  who,  from  their  wealth  got 
the  command  of  the  public  press,  been  interested  on  the  other  side,  it  was  impossi- 
ble that  the  proper  remedy  could  have  been  mistaken.  What  brought  on  the  crisis 
was  the  entire  dependence  of  the  circulation  on  gold,  which  inflamed  speculation  as 
much  in  1824  and  1825,  when  the  precious  metals  were  plentiful,  credit  high,  and 
prices  of  every  thing  were  rising,  as  it  starved  industry  and  ruined  credit  in  the 
end  of  1825,  when  twelve  millions  of  sovereigns  were  drawn  away  to  South  Ameri- 
ca.— Alison's  Europe. 


216  History  of  the  Bank  of  England. 

I  have  witnessed  many  such  scenes,  when  I  say,  conceive  these  poor 
creatures,  who,  in  return  for  their  labor,  have  received  these  worthless 
bits  of  paper,  oblio-ed  to  hawk  them  about,  and  part  with  them  for  what- 
ever they  can  get,  to  purchase  the  necessaries  of  life  for  them  and  their 
starving  families." 

The  following  is  a  summary  of  the  bill  for  the  better  regulation  of  co- 
partnerships of  certain  bankers  in  England  : 

"  Bodies  politic,  corporate,  or  partnerships  consisting  of  any  number 
of  partners,  may  carry  on  business  as  bankers,  anywhere  not  within  six- 
ty-five miles  of  London,  provided  none  of  them  have  banking  establish- 
ments in  London ;  that  they  are  all  individually  liable  for  the  issues  and 
debts  of  the  copartnerships;  they  must  neither  issue  nor  pay  any  bill 
within  the  prescribed  limits  at  a  shorter  date  than  six  months,  nor  for  a 
less  sum  than  £50. 

"The  names  of  the  firm,  and  the  names  of  the  partners,  are  to  be  duly 
registered,  of  which  registration  they  are  to  receive  a  certificate  from  the 
stamp  oflice.  The  names  of  those  w'ho  cease  to  be  partners  and  enter  as 
partners,  during  the  course  of  each  year,  must  also  be  registered." 

That  a  check  on  country  bankers  was  necessary,  may  be  gathered  from 
the  fact  that,  previous  to  the  act  of  iTYo,  notes  for  sums  as  small  as  ten 
and  five  shillings  were  issued  by  some,  while  others  circulated  them  to 
the  value  of  sixpence. 

An  unanimous  feeling  pervaded  all  parties  tliat  it  was  necessary  to  pro- 
vide some  relief  for  the  mercantile  interest.  The  force  of  public  opinion, 
the  increasing  agitation  of  the  commercial  world,  petitions  from  the  most 
important  persons  in  the  city,  and  deputations  from  all  the  great  trading 
and  manufacturing  interests,  convinced  the  government  that  the  period 
had  arrived  when  something  must  be  done  to  mitigate  the  prevailing  agi- 
tation. After  some  consultation  with  the  directors,  the  following  memo- 
randum w^as  forwarded  b}^  the  first  lord  of  the  treasury  and  the  chancellor 
of  the  exchequer: 

"  1.  Li  the  event  of  the  bank  consenting  to  advance  money  upon  the 
security  of  goods,  under  the  present  circumstances  of  the  country,  it  is 
understood  that  these  advances  should  not  exceed  the  sum  of  three  mil- 
lions in  the  whole. 

"  2.  That,  assimilating  the  principle  of  these  advances  to  advances  made 
in  the  ordinary  course  of  discount  upon  bills  of  exchange,  they  shall  be 
subject  to  repayment  in  three  months. 

"  3.  The  government  to  propose  to  Parliament  that  the  provisions  of 
the  act  respecting  merchant  and  factor,  which  will  be  in  force  in  October 
next,  shall  be  brought  into  immediate  operation  in  respect  to  any  goods 
which  may  be  pledged  to  the  bank  under  the  proposed  arrangement. 

"  4.  If  the  bank  should  think  proper  to  make  advances  in  conformity 
with  these  suggestions,  the  government  engage  to  submit  to  Parliament 
the  necessary  measures  for  enabling  them  to  reduce  the  present  amount 
of  the  advances  of  the  bank  to  the  government,  by  a  repayment  of  six 
millions ;  such  repayment  to  be  made  as  soon  as  may  be  practicable, 
and  at  all  events  before  the  close  of  the  present  session  of  Parliament." 

The  directors  of  the  Bank  of  England,  therefore,  feeling  that  this  dis- 


Legal  Question.  217 

tress*  was  barassing  to  the  public  interest,  determined  to  do  all  in  their 
power  to  relieve  it,  and  agreed  to  make  advances  to  private  individuals 
on  the  deposit  of  goods,  merchandise,  and  other  securities,  to  the  amount 
of  three  millions ;  and  in  the  principal  commercial  districts  commission- 
ers were  appointed  to  carry  the  arrangement  into  execution. 

But  the  very  fact  that  such  an  intervention  had  taken  place  was 
almost  sufficient  to  prevent  the  want  of  it.  When  the  capitalist  who  had 
hitherto  held  timidly  aloof  saw  a  proverbially  cautious  company  ad- 
vancing its  funds,  his  fears  were  dissipated,  his  own  coffers  became  un- 
locked, and,  with  a  renewed  confidence,  he  followed  in  the  same  path,  and 
returned  to  his  ordinary  sources  of  gain. 

The  bank  found  that  the  sums  required  fell  far  short  of  the  three  rail- 
lions  set  apart  to  this  object,  and  in  some  of  the  provincial  towns  the 
commissioners  were  in  the  enjoyment  of  sinecures.  The  most  honorable 
moderation  was  used  in  asking  for  advances,  and  those  parties  who  were 
compelled  to  appl}',  are  stated  to  have  shown  an  earnest  desire  to  receive 
only  the  smallest  sum  which  would  suffice  to  meet  their  immediate 
wants. 

The  following  is  a  list  of  the  places,  with  the  total  advance  to  the 
manufacturers  in  each : 

Manchester, £115,490 

Glasgow 81,700 

Sheffield 59,500 

Liverpool, 41,450 

Huddersfield, 80,300 

Birmingham, 19,600 

Dundee 10,500 

Norwich, 2,400 

To  carry  out  the  various  measures  resulting  from  the  panic,  different 
acts  of  Parliament  were  passed,  one  of  which  was  to  facilitate  the  loan  of 
money  on  deposits  and  pledges,  by  which  all  persons  in  possession  of 
bills  of  lading  were  to  be  regarded  as  owners  of  the  property  represented, 
to  secure  to  the  bank  a  legal  claim  on  the  deposits.  By  the  act,  also, 
which  prohibited  the  circulation  of  small  notes  after  1829,  a  weekly  re- 
turn was  to  be  made  to  the  treasury  by  the  Bank  of  England,  of  the  notes 
in  circulation  under  £5  ;  and  after  1829,  all  notes  below  £20  were  to  be 
made  payable  at  the  place  from  which  they  were  issued. 

In  February,  1826,  a  stock-broker  was  robbed  of  two  notes,  one  of 

*  On  the  one  hand,  it  was  maintained  by  Mr.  Attwood  and  Mr.  Bari\g:  "  It  was 
in  the  power  of  the  legislature  to  inflict  upon  the  country  such  a  metallic  currency, 
and  in  such  circumstances  as  they  chose,  but  it  was  not  in  their  power  to  control 
the  effects  of  such  a  change.  Introduced  in  1819,  rendered  more  stringent  in  1826 
and  1 829,  it  had  altered  the  nature  of  all  contracts,  and,  for  the  great  protit  of  capital- 
ists and  fund-holders,  spread  ruin  through  the  industrious  classes  in  the  country. 
During  former  periods  there  had  been,  it  is  true,  many  instances  of  some  local  or  tem- 
porary distress,  but  they  had  been  passing  only,  and  the  general  career  of  national 
prosperity  had  been  upon  the  whole  uninterrupted.  But,  when  the  act  of  the  legisla- 
ture forced  us  back  to  a  metallic  currency,  distress,  universal  in  its  extent,  and  deplo- 
rable in  its  effects,  followed  upon  the  change ;  and  such  distress  had  regularly  oc- 
curred whenever  we  approached,  even,  the  ruinous  measure  of  setting  up  an  exclu- 
sive gold  currency." 


218  History  of  the  Bank  of  England. 

£500  and  anotlier  of  £50.  The  necessary  information  was  given  at  the 
police-ofRce,  and  the  notes  stopped  at  the  bank.  In  May,  one  of  these 
was  presented  for  payment  through  Messrs.  Jones,  Lloyd  &  Co.,  and  the 
directors  refused  to  give  credit  for  it,  on  the  ground  that  it  was  stolen,  and 
that  they  had  been  directed  to  retain  it  until  the  right  owner  could  be 
discovered.  Messrs.  Jones,  Lloyd  &  Co.  next  requested  that  it  might  be 
returned,  but  this  was  also  declined.  A  question  then  arose  whether  it 
had  been  received  in  the  regular  transactions  of  business.  The  character 
of  the  gentleman  who  had  sent  it,  a  M.  de  la  Ciiaumette,  was  indisputable, 
but  beyond  this  the  question  seemed  doubtful.  The  law  had  long  since 
decided  that  if  a  proper  consideration  were  given  for  a  note,  the  holder 
was  entitled  to  recover  its  value,  although  it  might  have  been  stolen  be- 
fore it  came  into  his  possession.  But  if  it  should  have  been  lost  by  fel- 
ony, fraud  or  accident,  no  property  in  it  passed  to  the  thief  or  finder,  or 
to  any  other  person  having  a  knowledge  of  the  circumstances,  or  who 
did  not  receive  it  in  the  customary  way  of  business.  In  summing  up  the 
evidence,  Lord  Tenterden  said,  the  only  question  to  decide  v/as,  whether 
the  note  had  been  obtained  according  to  the  usual  mode  of  dealing,  in 
the  place  where  it  had  been  purchased.  The  jury  immediately  decided 
against  the  bank,  and  from  this  period  they  have  ceased  to  detain  stopped 
notes. 

The  extension  of  the  branches  of  the  Bank  of  England  was  not  viewed 
with  favor  by  the  country  bankers,  w.hose  influence,  importance  and 
profits  were,  in  many  instances,  depreciated  by  them.  The  great  trust 
with  which  these  branches  were  viewed,  attracted  many  of  the  customers 
of  the  private  establishments,  although  a  further  advantage  was  to  be 
procured  by  remaining  with  the  latter,  in  an  allowance  of  interest  on  de- 
posits. In  addition,  they  had  previously  charged  five  per  cent,  discount, 
and  in  some  places  even  an  extra  per  centage  as  commission  ;  the  branches, 
by  performing  the  same  business  at  four  per  cent.,  had  reduced  these  profits, 
and  compelled  them  to  lower  their  terms.  The  country  bankers,  there- 
fore, in  1827,*  alarmed  at  what  they  regarded  as  a  dangerous  increase  of 
the  branch  banks,  endeavored  to  organize  a  system  of  opposition  to  that 
which  they  termed  an  undue  extension  of  influence.  Noi;  is  this  to  be 
wondered  at.  Men  rarely  argue  calmly  when  their  interests  are  at  stake, 
and  are  often  most  partial  when  they  plume  themselves  upon  their  impar- 
tiality. Meetings  were  held  in  London  by  the  leading  providcial  bankers, 
and  a  natural  regard  for  their  private  interests  made  them  believe  their 
own  welfare  an  inseparable  part  of  the  prosperity  of  the  nation,  which 
w'-as,  in  their  opinion,  endangered  by  the  establishment  of  the  branch 
banks.  A  deputation  was  appointed  to  wait  on  the  first  lord  of  the 
treasury,  (Lord  Goderich,)  and  Mr.  Herries,  then  chancellor  of  the 
exchequer.  The  following  are  the  most  important  points  urged  by  the 
deputation,  and  principally  affect  the  corporation  of  the  Bank  of  Eng- 
land : 

"  That  the  late  measures  of  the  Bank  of  England,  in  the  establishment 
of  branch  banks,  have  the  evident  tendency  to  subvert  the  general  bank- 
ing system  that  has  long  existed  throughout  the  country,  and  .which  has 

*The  death  of  Mr.  Canning,  premier,  occurred  August  8,  1827,  aged  57. 


Loans  during  the  Shuttings.  219 

grown  up  with,  and  been  adapted  to  the  wants  and  conveniences  of  the 
public, 

"That  it  can  be  distinctly  proved  that  the  prosperity  of  trade,  the  sup- 
port of  agriculture,  the  increase  of  the  national  revenue,  are  intimately 
connected  with  the  existing  system  of  banking. 

"  That  the  country  bankers  would  not  complain  of  rival  establishments 
founded  upon  equal  terms ;  but  they  do  complain  of  being  required 
to  compete  with  a  great  company,  possessing  a  monopoly  and  exclusive 
privileges. 

"  That  should  this  great  corporation,  conducted  by  directors  Avho  are 
not  personally  responsible,  succeed  by  means  of  these  exclusive  advan- 
tages, in  their  apparent  object  of  supplanting  the  existing  banking  estab- 
lishments, they  will  thereby  be  rendered  masters  of  the  circulation  of  the 
country,  which  they  will  be  enabled  to  contract  or  expand  according  to 
their  own  will ;  and  thus  be  armed  with  a  tremendous  power  and  influ- 
ence, dangerous  to  the  stability  of  the  property  and  the  independence  of 
the  country." 

The  reply  made  by  Lord  Goderich,  as  first  minister  of  the  crown, 
and  by  Mr.  Herries,  as  chancellor  of  the  exchequer,  was  polite  and 
diplomatic,  but  unsatisfactory.  "  They  were  fully  sensible  of  the  great 
importance  of  the  subjects  which  were  brought  before  them  by  the  dep- 
utation, and  although  it  was  obviously  impossible  they  could  undertake, 
on  the  part  of  the  government,  to  express  upon  that  occasion  any  opinion 
upon  the  matters  under  consideration,  they  could  assure  the  deputation 
that  all  that  had  been  communicated  should  receive  the  most  deliberate 
and  serious  attention."  Other  topics  of  complaint  arose  from  time  to 
time,  one  of  which  was,  that  the  branch  banks  refused  to  take  the  notes 
of  the  country  bankers,  unless  an  account  had  been  previously  opened 
with  them. 

Twenty  years  have  passed,  and  the  above  resolutions  are  all  answered 
by  the  simple  fact,  that  the  number  of  branches  of  the  Bank  of  England 
^throughout  the  entire  kingdom  amounts  to  thirteen.  To  prove  that  ob- 
jections which  ai'e  really  tenable,  are  met  by  government,  it  may  be  stated 
that  another  very  fair  subject  of  complaint  was,  that  the  issue  of  the 
branch  banks  was  subject  to  a  less  amount  of  stamp  duty  than  that  of 
the  country  bankers,  who  claimed  a  right  of  being  included  in  the  com- 
position of  the  parent  bank  of  £3,500  for  every  million  circulated.  The 
bankers  of  Birmingham  and  its  environs  proved  that,  for  a  twenty-one 
days'  bill  on  London,  they  paid  three  shillings  and  six  pence,  while  the 
branches  paid  but  five  pence  ;  and  that  for  a  yearly  circulation  of 
£10,000  in  bills  of  exchange  of  £20  each,  the  former  would  pay  £650, 
while  to  the  latter  the  cost  would  be  but  £35.  The  claim  made  by  the 
country  bankers  was  equitable,  and  they  were,  by  9  Geo.  IV.,  c.  23, 
allowed  to  compound  for  their  notes  on  the  same  terms  as  the  bank. 
The  composition  also  included  bills  drawn  on  London  at  twenty-one  days' 
date. 

The  objections  of  the  provincial  bankers  to  the  branches  of  the  Bank 
of  England  are  interesting,  proving,  as  they  do,  the  jealousy  which  springs 
from  small  causes,  and  the  difficulty  which  generally  exists  in  the  estab- 
lishment of  a  new  principle. 


a 


220  History  of  the  Bank  of  England. 

In  tills  year*  the  directors  commenced  a  system  which  has  been  found 
of  great  benefit  to  the  monetary  interest.  The  period  during  which  the 
stocks  were  closed  to  prepare  for  the  payment  of  dividends,  prevented 
many  persons  from  availing  themselves  of  those  funds  to  which  they 
looked  for  support,  and  occasioned  a  pressure  on  the  money  market. 
For  the  relief  of  this,  a  notice  was  issued  to  the  eft'ect,  that  the  directors 
would  be  ready  to  receive  applications  for  loans,  on  the  security  of  bills 
of  exchange,  exchequer  bills,  and  East  India  bonds,  at  three  per  cent. 
These  loans,  which  were  proposed  to  commence  on  the  5th  December, 
1829,  were  to  be  for  sums  of  not  less  than  £2,000,  for  a  period  of  not 
less  than  ten  days,  and  were  to  be  repaid  on  or  before  the  succeeding  15th 
of  January.  On  the  same  day,  also,  the  3d  December,  1829,  notice  was 
given  that,  from  and  after  tliat  day  the  bank  would  be  ready  to  receive 
applications  for  loans  on  the  deposit  of  gold  bullion,  to  be  valued  at  V7s. 
9d.  per  ounce,  at  £2  per  cent,  per  annum. 

In  1830,  the  interest  on  the  new  four  per  cent,  stocks,  which  had 
already  been  reduced  from  five  per  cent.,  was  again  reduced  to  three  and  a 
half,  from  which  operation  they  derived  their  name  of  the  "  New  3|-  per 
cents." 

The  uses  of  bank  notes  are  manifold ;  but  the  following  is  a  novel 
mode  of  rendering  them  serviceable.     One  of  these  for  £5  came  in  the 


*Tlie  leading  commercial  and  financial  events  of  the  ten  years,  1821-1830,  were 
as  follow : 

1821. — Gold  sovereigns  were  issued  from  the  mint.  Cession  of  Florida  by  the 
Spanish  goA'ernment  to  the  United  States.  Captains  Parry  and  Lyon's  expedition 
to  the  Arctic  Ocean,  left  England  30th  March.  Bank  of  England  resumed  specie 
payments.  1822. — Funeral  of  Coutts,  the  London  banker,  4th  March.  Bank  of 
England  advanced  their  rate  of  discount  to  four  per  cent.,  June  20.  The  first  cot- 
ton-mill in  Lowell  erected.  1823. — Revival  of  business  in  the  English  factories. 
1824. — Advance  in  the  prices  of  agricultural  produce  in  England.  Act  passed  for  the 
Thames  Tunnel,  24th  June.  Fauntleroy,  banker,  hung  for  forgery,  30th  Novem- 
ber. Champlain  Canal,  New-York,  completed.  Speculation  rife  in  England.  1825. 
— Panic  in  the  English  money  market,  December.  Failure  ^f  numerous  country 
banks.  Departure  of  Franklin  and  Lyon's  Arctic  Expedition.  Erie  Canal  com- 
pleted. 1826. — Mr.  Huskisson's  free  trade  policy  advocated  in  the  House  of  Com- 
mons by  vote  of  223  to  40.  Coin  in  Bank  of  England  reduced  to  £2,460,000,  28th 
February.  Lotteries  suppressed  by  act  of  Parliament,  October  18th.  1827. — Com- 
mercial confidence  restored  in  England,  and  employment  for  the  poor.  "  Society 
for  the  Diffusion  of  Useful  Knowledge"  established,  at  the  instance  of  Lord  Brougham. 
Anti-slave  trade  law  passed  in  France.  Union  Canal,  Pennsylvania,  completed. 
Quincy  Rail-Road  completed.  1828. — Branches  of  the  Bank  of  England  established. 
Delaware  and  Hudson  Canal,  Syracuse  and  Oswego  Canal,  New-York,  completed. 
India-rubber  goods  manufactured  in  Connecticut.  Sliding  scale  duties  on  corn 
adopted.  The  National  Bank  of  Greece  founded.  1829. — Increase  of  silk  manu- 
factures in  England,  and  reduction  of  duty  on  raw  silk.  Prize  awarded  to  Mr. 
Stephenson  for  his  locomotive  engine  on  the  Liverpool  and  Manchester  Railway. 
Subscription  bj'  Congress  to  the  Chesapeake  and  Ohio  Canal,  May  3.  Departure  of 
Captain  Ross  on  his  Arctic  voyage  of  discovery.  Chesapeake  and  Delaware  Canal 
opened,  17th  October.  1830. — Opening  of  the  Liverpool  and  Manchester  Railway, 
loth  September.  Sudden  death  of  Mr.  IIuskisson.  Free  navigation  of  the  Black 
Sea  opened  to  the  United  States  by  treaty,  7th  May.  Charles  X.  fled  from  Paris, 
31st  July.  West  India  trade  with  the  United  States  opened  to  British  vessels. 
Independence  of  Belgium  acknowledged.  Pennsylvania  State  Canal  finished.  Four 
per  cent,  bank  annuities  reduced.     Stoppage  of  the  Bank  of  Lisbon. 


Danger  to  the  Bank.  221 

course  of  business  to  a  mercantile  house  in  Liverpool.  On  the  back  of 
it  was  written:  "  If  this  note  gets  into  the  hands  of  John  Dean,  of 
Longliill,  near  Carlisle,  his  brother  Andrew  is  a  prisoner  in  Alo-iers." 
The  circumstance  was  interesting  and  appeared  in  a  newspaper,  in  which 
the  paragraph  was  perused  by  a  person  in  Carlisle,  who  had  known  in 
past  years  one  Andrew  Dean,  and  was  still  acquainted  with  his  brother 
John  Dean,  of  the  place  named  in  the  note.  The  son  of  the  latter  hap- 
pened to  be  in  Carlisle,  and  hearing  the  intelligence,  gave  such  a  report 
of  his  uncle  that  there  was  every  reason  to  believe  he  was  the  Andrew 
Dean  whose  captivity  became  thus  singularly  known  to  his  friends  in 
England.  Of  these  things  are  formed  the  romance  of  life;  and  the  im- 
possibility of  assisting  the  Algerine  slave  niust  often  have  been  a  painful 
remembrance  to  the  prisoner's  brother. 

The  danger  which  has  always  threatened  the  bank,  when  large  bodies 
of  disaffected  men  are  drawn  together,  was  renewed  in  November,  1830.* 
The  period  was  one  of  doubt  and  dread.  An  impulse  had  been  given  to 
all  Europe  ;  and  France  had  again  taken  the  initiative  in  spreading  a 
desire  for  change.  The  tenth  Charles  proved  a  true  Bourbon  ;  the 
spirit  of  the  people  burst  forth  in  opposition  to  the  tyranny  of  the  mon- 
arch and  his  ministers,  and  Great  Britain  once  more  sheltered  the  royalty 
of  France.  The  spirit  spread  over  Europe.  Belgium  was  separated  from 
Holland.  Saxony  taught  her  indolent  monarch  that  there  was  a  limit  to 
human  endurance.  The  free  city  of  Hamburgh  felt  the  influence  ;  and 
Switzerland  in  her  beautiful  canton  of  Berne,  responded  to  the  cry.  Po- 
land once  more  re-asserted  her  ancient  rights,  expelled  the  garrison  of  her 
despotic  monarch  from  Warsaw,  and  proclaimed  herself  free.  England 
felt  that  mighty  and  revolutionary  spirit.  The  demands  for  reform  grew 
earnest  and  incessant.  Ireland  was  told  by  the  liberator  "to  look  at 
France  and  Belgium."  Kent,  the  garden  of  England,  witnessed  the  first 
disturbances.  Night  after  night,  conflagrations  were  lighted  up  by  bands 
of  incendiaries.  Mills  were  attacked.  Machinery  was  demolished.  All 
protection  for  property  seemed  at  an  end.  Rioters  spread  terror  and 
alarm  throughout  the  day  ;  night  was  the  signal  for  blazing  fires,  which 
excited  a  fearful  shudder  in  those  who  beheld  them.  London  felt  the 
desire  of  change  and  clamored  for  an  improved  representation.  The 
Duke  of  Wellington  indicated  his  intention  of  resisting  any  measure  of 
reform  which  might  be  produced,  and  he  grew  as  unpopular  as  a  statesman 
as  he  had  been  popular  as  a  soldier. 

On  Tuesday,  the  9th  of  November,  the  sovereign  was  expected  to  dine 

*  "With  this  mournful  catastrophe,  (the  death  of  Mr.  Huskisson,  September  15th, 
1830,)  and  thus  baptized  in  blood,  did  the  railway  system  arise  in  England.  Rapid 
bej^ond  all  human  calculation  was  the  progress  which  it  made,  and  boundless  beyond 
all  human  ken  are  the  effects  which  it  has  produced.  Like  most  of  the  discoveries 
destined  to  produce  great  and  lasting  changes  on  human  affairs,  its  introduction 
owed  little  to  science,  by  which  it  was  distrusted,  and  its  effects  did  not  immedi- 
ately develop  themselves.  But  ere  long  they  were  fully  made  manifest,  and  they 
have  now  in  a  manner  changed  the  whole  face  of  society  in  the  civilized  world.  Be- 
fore the  year  1850,  no  less  than  eleven  hundred  aad  eleven  acts  of  Parliament  had 
been  passed  to  form  new  lines  or  extend  old  ones  ;  and  the  capital  authorized  to  be 
expended  on  them  amounted  to  the  enormous  sum  of  £348,012,188. — Edinb.  Rev. 
15 


222  History  of  the  Bank  of  England. 

witli  the  civic  authorities,  but  the  prevalent  feeling  of  discontent  ren- 
dered this  visit  not  advisable  in  the  eyes  of  the  lord  mayor  elect,  who 
had  received  various  letters,  stating  that  it  was  the  intention  of  a  set  of 
desperate  men  to  attack  the  duke,  and  believing  himself  justified  by  the 
various  symptoms  of  disaffection,  which  were  visible  to  all,  he  addressed 
a  communication  to  his  grace,  which,  from  its  alarming  character,  pre- 
vented the  projected  visit.  There  was  cause  for  apprehension,  and  even 
alarm.  Private  information  liad  been  received  by  the  ministry  of  an 
attack  upon  the  residence  of  the  Duke*  of  Wellington.  Inflammatory 
hand-bills  were  circulated.  "  Not  written  papers,"  said  Sir  Robert  Peel, 
"drawn  up  by  illiterate  persons  and  casually  dropped  in  the  streets,  but 
printed  hand-bills,  not  ill-adapted  for  the  mischievous  purpose  they  were 
intended  to  answer."  Under  these,  and  various  other  circumstances,  the 
government  advised  his  majesty  to  defer  the  visit. 

"As  soon  as  this  determination  became  known,"  says  Mr.  Hughes, 
"  consternation  pervaded  all  ranks.  Men  believed  that  some  atrocious 
conspiracy  against  the  royal  person  had  been  discovered,  or  even  that  a 
revolution  was  at  hand.  The  public  funds  fell,  and  mercantile  confidence 
was  generally  interrupted.  The  entertainment  at  Guildhall  was  deferred, 
and  instead  of  civic  festivities  the  city  was  disturbed  with  the  rumbling 
of  artillery,  and  the  passage  of  troops.  The  tower  ditch  was  filled  with 
water,  and  other  precautions  taken  to  put  that  fortress  into  a  state  of 
security.  Extra  guards  were  placed  at  the  bank,  and  at  the  magazine, 
in  Hyde  Park;  while  large  bodies' of  troops  were  billeted  in  the  neigh- 
borhood of  the  metropolis." 

The  effect  of  this  upon  the  minds  of  the  citizens  was  instantaneous. 
Arms  were  purchased  and  doors  were  fastened,  as  if  the  banner  of  rebel- 
lion had  been  displayed  in  the  streets.  In  an  hour  and  a  half  consols  fell 
three  per  cent.  The  bank  directors  felt  the  danger  of  their  position.  The 
public  thoroughfares  were  crowded  with  earnest  and  anxious  counte- 
nances. Questions  were  asked  concerning  the  approaching  danger,  which 
no  one  could  answer.  Every  one  seemed  to  expect  some  strange  and 
mysterious  calamity.  Small  bodies  of  men,  pouring  from  their  suburban 
localities,  passed  the  depository  of  the  wealth  of  the  country,  and  no  one 
knew  with  what  intention.     The  rumor  spread  that  Temple  bar  and  the 


*  "When  I  find,"  said  SirF.  Burdett,  "  the  Prime  Minister  of  England  (the  Duke 
of  Wellington)  so  shamefully  insensible  to  suffering  and  distress,  wliich  are  pain- 
fully aj^parent  throughout  the  land;  when,  instead  of  meeting  such  an  overwhelming- 
pressure  of  necessity  with  some  measures  of  relief,  or  some  attempt  at  relief,  he 
seeks  to  stifle  every  important  inquiry ;  when  he  calls  that  a  partial  and  temporai-y 
evil,  Avhich  is  both  long-lived  and  universal,  I  cannot  look  on  such  a  mournful  crisis, 
in  which  public  misfortune  is  insulted  by  ministerial  apathy,  without  hailing  any  pros- 
pect of  change  in  the  system  which  has  produced  it.  What  shall  we  say  to  the 
ignorance  which  can  attribute  our  distresses  to  the  introduction  of  machinery  and 
the  application  of  steam,  that  noble  improvement  in  the  inventions  of  man,  to 
which  men  of  science  and  intelligence  mainly  ascribe  our  prosperity  ?  I  feel  a  high 
and  unfeigned  respect  for  that  illustrious  person's  abilities  in  the  field;  but  I  cannot 
help  thinking  that  he  did  himself  no  less  tlian  justice  when  he  said,  a  few  months 
before  he  accepted  office,  that  he  should  be  a  fit  inmate  for  an  asylum  of  a  peculiar 
nature,  if  he  ever  were  induced  to  take  such  a  burden  on  his  shoulders." — Mirror  of 
Parliament,  vol.  1,  p.  67. 


Financial  Position  of  the  Bank  of  Ungland.  223 

bridges  were  to  be  barricaded,  the  gas  cut  off,  and  the  plunder  of  tbe  city 
to  follow.  It  was  felt  that  the  populace  would  have  discriminated  suf- 
ficiently for  their  own  interests  to  have  pillaged  the  bank.  A  trl-colored 
flag  was  borne  by  the  mob.  By  six  o'clock  in  the  evening  all  shops  were 
closed,  and  every  appearance  of  business  at  an  end.  All  the  assistants 
were  required  to  remain  at  the  Bank  of  England,  as  the  possibility  of 
attack  was  feared.  Some  casks  of  biscuits  were  ordered  in  to  provide 
against  the  wants  of  a  siege,  in  case  the  mob  should  be  sufficiently  des- 
perate, or  sufficiently  strong  to  attack  it.  But  the  civil  authorities  were 
able  to  meet  the  rioters.  A  few  broken  heads  cooled  their  courage  ;  and 
after  venting  their  disapprobation  in  groans  and  hisses  for  the  unpopular 
ministry,  and  destroying  the  windows  of  a  police  station,  for  which  their 
occupation  gave  them  an  especial  dislike,  they  dispersed,  without  com- 
mitting any  of  the  dreaded  enormities.  The  bank  directors  were  relieved 
from  fear,  and  the  clerks  released  from  the  civic  garrison.  "  Scarcely 
were  twenty-four  hours  passed  over,"  said  a  writer  of  the  day,  "  when 
men  were  laughing  at  the  foolish  trepidation  into  which  they  had  been 
betrayed,  and  wondering  where  any  feeling  of  alarm  could  have  arisen." 
If  their  rejoicings  were  in  proportion  to  their  fears,  they  were,  doubtless, 
very  hearty.  It  is  the  nature  of  mankind  to  laugh  at  past,  and  magnify 
future  fears.* 

From  the  pamphlet  of  Mr.  Palmer,  the  following  is  given  as  a  clear, 
succinct  account  of  the  financial  position  of  the  bank  from  1830  to  1832. 
Nor  can  a  better  or  sounder  authority  be  taken  :  "  It  was  shown,  in  evi- 
dence," says  this  gentleman,  in  his  "  Causes  and  Consequences  of  the 
Pressure  on  the  Money  Market,"  "  that  the  policy  pursued  by  the  bank, 
subsequent  to  the  withdrawal  of  the  £l  and  £2  notes  in  England  and 

*  Sir  James  Graham  made  the  following  remarks,  which,  however  true  at  the 
time,  were,  perhaps,  more  to  be  admired  for  their  oratorical  power  tlian  their  states- 
manlike wisdom :  "  Sir,  I  have  heard  something  of  the  luxury  of  the  present  times. 
I  do  not  linow  whether  the  example  was  drawn  from  the  gorgeous  palaces  of  kino-s 
or  the  rival  palaces  of  ministers,  splendidly  provided  for  them  by  the  public,  or 
from  the  banquets  of  some  East  India  director,  gorged  Avith  the  monojjoly  of  the 
China  trade,  or  from  some  Jew  contractor,  who  sujjplies  hostile  armies  with  gold, 
drawn  from  the  coffers  of  the  Bank  of  England,  and  lends  money  to  France,  arisino- 
out  of  profits  or  loans  contracted  here  in  depreciated  paper,  but  which  must  be  paid 
in  gold.  But  I  must  take  leave  to  remark,  that  we  ought  not  to  draw  our  notions 
of  the  state  of  the  country  from  scenes  such  as  these. 

'  Ye  friends  to  truth,  ye  statesmen  who  survey 
The  rich  man's  joys  increase,  the  poor  decay, 
'Tis  yours  to  judge  how  wide  the  limits  stand 
Between  a  splendid  and  a  haj)py  land.' 

"  Where,  I  ask,  are  all  the  boasted  advantages  of  this  once  happy  country  ? 
Where  are  all  the  blessings  which  once  distinguished  her  ?  Where  are  all  the  corafoks 
which  her  children  enjoyed  for  ages  ?  lAlas  !  with  deep  regret  I  witness  that  all, 
all  are  gone.  Pinching  hunger  and  gloomy  despair  now  usurp  their  station.  The 
weavers  throughout  the  country  are  only  earning  4s.  2d.  a  week,  and  their  food  is 
oat-meal,  water  and  potatoes.  They  work  fourteen  or  sixteen  hours  a  day,  and  yet 
they  can  only  earn  this  scanty  pittance  to  support  their  wives  and  families.  It  is  an 
extraordinary  fact,  that  by  dint  of  labor  the  power-looms  (which  were  supposed  to 
have  caused  their  distress)  are  absolutely  underwrought  by  these  almost  starving 
people." — Mirror  of  Parliament,  \q\.  1. 


224  History  of  the  Bank  of  England. 

Wales,  had  been  to  maintain  their  securities,  as  nearly  as  possible,  at  a 
fixed  amount,  and  to  allow  the  contraction  of  the  currency,  effected  by 
the  return  of  bank  notes  for  bullion,  gradually  to  proceed  until  the  value 
of  the  paper  money,  remaining-  in  circulation,  Avas  so  far  increased  as  to 
occasion  the  return  of  that  specie  to  the  bank  which  might  have  been  ex- 
ported, and  thus  to  replace  the  currency  upon  a  level  with  that  of  other 
countries.  That  system  had  appeared  to  work  satisfactorily,  and  without 
any  forced  action,  on  the  part  of  the  bank,  in  contracting  its  circulation. 
It  was  tried  upon  the  change  of  government  in  France,  in  July,  1830, 
when  credit  throughout  that  kingdom  was  shaken  to  its  foundation.  At 
that  period  the  Bank  of  England  was  possessed  of  twelve  millions  of 
bullion.  Immediately  on  the  events  referred  to  taking  place,  tlic  cur- 
rency of  England  exhibited  an  excess  compared  with  France  and  other 
parts  of  Europe.  The  consequence  of  that  derangement  between  the 
currencies  of  this  and  other  countries  Avas  a  continued  diminution  of  the 
bullion  held  by  the  bank,  from  July,  1830,  to  February  or  March,  1832, 
when  the  increased  value  of  money  in  England,  and  the  gradual  restora- 
tion of  credit  on  the  continent,  gave  a  favorable  turn  to  the  foreign  ex- 
changes, which  continued  in  our  favor  till  the  autumn  of  1833,  at  which 
time  the  bullion,  in  deposits,  amounted  to  nearly  eleven  millions.  At 
this  period  an  exportation  of  the  precious  metals  again  commenced,  from 
causes  that  will  hereafter  be  explained,  as_  well  as  the  reason  why  that 
system,  which  appeared  to  adjust  itself  so  satisfactorily  from  1830  to 
1832,  failed  from  1833  to  1836  ;  for,  although  during  the  former  period 
the  bullion  in  the  bank  was  diminished  from  twelve  to  five  millions, 
yet,  in  the  progress  of  this  reduction,  as  there  was  no  excitement  and  no 
undue  credit  given  by  the  bank  in  the  interior  of  the  country,  the  inter- 
est of  money  gradually  rose  from  two  and  a  half  to  four  per  cent,  per 
annum  for  first-rate  commercial  paper,  and  then,  without  discredit  or  dis- 
trust of  any  kind,  the  bullion  returned  into  the  coft'crs  of  the  bank,  and 
money  nearly  resumed  its  former  value,  having  gradually  fallen  from  four 
to  tVo  and  three-quarters  per  cent,  in  July,  1833." 

The  causes  alluded  to  by  Mr.  Palmer  were  the  over-issues  of  the  joint- 
stock  banks,  of  which  forty-two  were  established  in  eleven  months.  The 
principal  number  of  these  were  banks  of  issue,  and  whether  the}'  caused 
the  difficulties  hereafter  to  be  related,  or  not,  they  must  have  had  a  direct 
influence  on  the  circulation. 

By  a  revision  and  melting  of  the  silver  coin  in  1831,  the  bank  lost  on 
the  sixpenny  pieces  £4,601  Is.  3d.,  and  on  other  denoniinations  £62,982 
19s.  2d.,  making  a  total  loss  of  £67,584  Os.  5d. 

In  1832  occurred  the  last  run  upon  the  bullion  of  the  bank,  occasioned 
by  political  causes.  The  Reform  Bill,  introduced  by  Lord  John  Russell, 
had  stirred  party  feeling  to  its  very  depths.  The  powerful  owners  of 
what  were  termed  pocket  boroughs,  saw  their  property  attacked,  and 
their  influence  depreciated.  The  measure  was  negatived,  by  a  majority 
of  eight.  The  king  went  down  to  the  House  of  Lords,  "and,  in  the 
midst  of  one  of  the  most  extraordinary  scenes  that  ever  occurred  in  that 
place,"  prorogued  Parliament  until  the  10th  of  May.  The  excitement 
was  increased  by  a  general  election,  and  popular  feeling  triumphed ;  but 
the  license  exceeded  any  thing  ever  witnessed  under  similar  circumstances. 


General  Excitement.  225 

Life  and  property  were  no  longer  secure  to  those  candidates  who  opposed 
the  measure.  An  opponent  of  the  bill  was  stoned  before  the  altar.  Con- 
scientiousness was  regarded  as  obstinacy,  and  the  only  hope  for  opposing 
candidates  was  to  be  found  in  flight  or  concealment. 

In  the  lower  house  the  bill  was  again  introduced,  and  passed  by  a  large 
majority.  The  speech  made  by  Lord  Brougham  in  the  upper,  was  so 
extraordinary  in  its  varied  sarcasm,  learning  and  great  earnestness,  that 
one  of  the  public  came  down  to  the  Bank  of  England,  and  transferred 
£200  into  his  lordship's  name,  as  a  testimony  of  his  appreciation.  The 
measure  was  rejected  in  the  House  of  Lords.  A  strange  feeling  of  excite- 
ment spread  throughout  the  country.  Meetings  were  held  all  over  Eng- 
land, by  all  classes,  pledging  themselves  to  the  support  of  government. 
The  lord  mayor  and  corporation,  attended  by  50,000  followers,  presented 
an  address  to  the  throne.  The  principal  opponents  of  the  bill  were 
marked  with  the  disapprobation  of  the  populace.  The  residence  of  the 
Duke  of  AVellington  was  attacked.  A  shower  of  stones  bore  the  Mar- 
quis of  Londonderry  from  his  horse,  as  the  most  unanswerable  of  all  argu- 
ments. The  Duke  of  Cumberland  was  dragged  to  the  ground,  and  would 
probably  have  been  killed  but  for  the  interference  of  the  police.  The 
mansion  of  the  Duke  of  Newcastle,  the  head  of  the  borough  proprietors, 
was  fired.  The  Archbishop  of  Canterbury  was  insulted  ;  and  Bristol  em- 
ulated the  London  riots  of  1,780.  In  the  following  December,  the  same 
scenes,  but  with  increased  violence,  recurred.     The  ministry  resigned. 

Lord  Lyndhurst  was  sent  for,  and  on  communicating  with  the  Duke  of 
Wellington,  "  I  should  be  ashamed  to  crawl  about  this  metropolis  if, 
under  such  circumstances,  I  did  not  go  to  the  king,"  were  the  first  words 
of  the  "Iron  Duke,"* 

The  knowledge  that  the  great  opponent  of  the  bill  was  likely  to  be  re- 
called, spread  throughout  the  metropolis.  Staves,  with  the  tri-colored 
device  painted  on  them,  and  sticks,  with  concealed  swords,  were  sold  in 
great  quantities,  while  the  demand  for  bludgeons  could  scarcely  be  sup- 
plied. A  speaker  of  the  Birmingham  Political  Union,  amidst  the  shouts 
of  assembled  multitudes,  called  on  his  hearers  to  pay  no  taxes  until  the 
bill  should  be  passed,  while  a  forest  of  hands  sprung  up  in  answer  to  his 
solemn  but  most  misguided  appeal.  The  small  speakers  of  their  neigh- 
borhoods— men  who  electrified  their  families  with  the  force  of  their  lungs, 

*  In  truth,  tbe  Duke  of  Wellington's  position  as  prime-minister,  so  far  from  being 
an  enviable  one,  was  among  the  most  critical  and  painful  that  could  be  imagined. 
Like  Mr.  Burke,  after  his  secession  from  the  Whigs  in  1793,  he  might  have  said, 
"  There  is  a  severance  which  cannot  be  healed ;  I  have  lost  my  old  friends,  and  am 
too  old  to  make  new  ones."  He  had  no  party  in  the  House  of  Commons,  no  real 
colleagues  in  the  Cabinet.  The  Duke's  speech  on  the  distresses  of  the  country  met 
the  question  boldly  and  openly,  in  his  usual  straightforward  way ;  but  nothiug  can 
be  more  evident  than  that  it  involved  the  most  obvious  fallacies.  He  said  that  the 
currency,  including  gold  and  silver,  Avas  as  large  as  it  had  been  at  the  highest 
period  during  the  war ;  forgetting  that,  since  its  termination,  the  nation  had  ad- 
vanced a  fourth  iu  numbers,  and  a  half  in  industry  and  commerce,  and  that,  to  ren- 
der the  currency  commensurate  to  its  necessities,  it  should  not  have  remained  the 
same,  but  advanced  in  a  similar  proportion.  Probably  the  Duke  would  have  given 
a  sharp  answer  to  his  Commissary-General,  in  1813,  if  he  had  propo.sed  the  same 
amount  of  rations  for  his  army,  then  75,000  strong,  which  had  sufficed  for  it  in  the 
preceding  year,  when  it  was  45,000  only. — Alisojj's  Hurope. 


22G  History  of  the  Bank  of  England. 

and  called  themselves  orators — were  in  great  requisition  ;  and  the  burden 
of  tlicir  song  was  the  favorite  one  of  "  pay  no  taxes — pay  no  taxes." 

A  terrible  excitement  was  exhibited  throughout  England.  "  Prepara- 
tions," says  one  writer,  "  were  made  for  a  great  public  tragedy."  War- 
rants were  prepared  ;  the  leaders  of  political  unions  were  to  be  appre- 
hended ;  troops  began  to  march  on  disaffected  places;  and  the  monetary 
interest  felt  the  shock.  On  every  wall  throughout  the  metropolis  the 
significant  words  of — "  Stop  the  Duke  !  Go  for  gold  !"  were  boldly  pla- 
carded. For  a  week  the  corporation  sustained  a  run  upon  its  specie, 
which  was  reduced  to  £4,919,000.  In  one  day  £307,000  were  paid. 
It  soon  became  very  questionable  whether  the  run  for  gold  would  not 
drain  every  banker  in  the  kingdom  ;  and  the  writing  on  the  wall  spake  to 
those  having  authority  with  a  power  far  exceeding  the  most  brilliant 
oratory.  Lord  Lyndhukst  found  it  impossible  to  form  a  ministry ;  and 
Earl  Grey  was  recalled. 

That  the  demand  was  political  was  proved  from  the  trifling  nature  of 
the  applications  from  the  country  bankers.  "  I  never  saw  the  hall  of  the 
bank,"  said  Mr.  Richards,  in  his  evidence  in  1832,  "except  in  1825,  so 
crowded  with  applicants  tendering  their  notes.  They  had  not,  in  gene- 
ral, the  appearance  of  being  people  from  the  country."  One  person  who 
had  money  with  Jones,  Lloyd  «fc  Co.  to  the  amount  of  £20,000,  drew  it 
out  from  them  in  the  form  of  notes,  and  then  went  to  the  bank  and  de- 
manded gold.  The  London  bankers  found  that  the  claims  extended  to 
their  establishments.  Several  refused  to  pay  in  gold,  but,  on  giving 
notes,  said,  "You  may  go  and  get  gold  for  them  at  the  bank."  The 
stockholders  took  alarm,  sold  their  government  securities,  and  demanded 
specie  in  return.  The  funds  were  low  ;  and  when  the  panic  had  subsided 
and  confidence  re-appeared,  the  same  persons  brought  back  their  sove- 
reigns and  repurchased  their  stock  at  a  heavy  loss.  It  is  impossible  to 
say  how  far  the  panic  would  have  spread,  had  the  one  pound  notes  been 
in  existence.  But  it  is  far  from  improbable  that  out  of  the  extensive 
organization  which  then  existed,  some  deeply  rooted  scheme  for  a  simul- 
taneous demand  might  have  arisen,  and  produced  consequences  as  unfor- 
seen  as  terrible.  As  it  was,  £1,500,000  were  paid  in  a  few  days,  but  no 
further  evil  occurred  to  the  Bank  of  England.* 

*  What  rendered  the  great  increase  in  the  expenditure  and  taxation  of  France  in 
1830  still  more  exasperating,  was  its  advent  at  a  time  when  the  industrial  resources 
of  the  kingdom,  so  far  from  increasing,  were  rapidly  diminishing,  and  the  general 
misery  of  the  country  was,  in  consequence,  at  its  height.  Statistical  facts,  of  un- 
questionable authenticity,  which  the  government  of  Loris  Philippe  itself  has  adduced, 
prove  this  beyond  a  doubt.  The  commercial  paper,  under  discount  at  the  Bank  of 
France,  which,  in  1829,  had  been  129,000,000  francs,  (£5,400,000,)  had  sunk  in  1832 
to  29,000,000  francs,  (£1,140,000.)  The  sums  advanced  by  the  Bank  of  France  to 
the  public  exchequer,  which  in  1828  had  been  73,000,000  francs,  (£2,700,000,)  had 
risen  in  1830  to  291,500,000  francs,  (£11,600,000.)  The  five  per  cents  which,  in 
1829,  had  been  all  109.85  cents,  sunk  in  1831  to  74.75  cents.  The  exports  in  the 
former  year  had  been  504,247,000  francs,  (£20,200,000,)  in  the  latter,  they  had  sunk 
to  455,000,000  francs;  (£18,200,000;)  the  imports,  which,  in  the  first" year,  had 
been  483,000,000  francs,  (£19,200,000,)  had  sunk  in  the  last  to  374,000,000  francs, 
(£15,570,000.)  So  great  a  diminution  of  receipts,  and  increase  of  burdens  in  so 
short  a  time,  indicated  in  the  clearest  manner  the  calamitous  action  of  the  revolu- 
tion on  the  industry  and  resources  of  the  nation. — Alison's  Europe,  vol.  6,  p  430. 


Increase  of  Forgery.  227 


CHAPTER  XX, 

FORGERY ENDEAVOR  TO   PREVENT   IT COMMITTEE   APPOINTED INCREASE   OF   THE  CRIME 

SIR  SAMUEL  ROMILLT  AND  SIR  JAMES  MACKINTOSH PROGRESS  OF  OPINION PE- 
TITION OF  THE  BANKERS INEFFICACY  OF  THE  PUNISHMENT INSTANCE  OF  IT FORGE- 
RIES   OF   BONAPARTE. 

Previous  to  the  year  1819,  the  severity  of  that  part  of  our  penal  code 
which  awarded  the  punishment  of  death  for  forging  or  uttering  forged 
notes,  together  with  the  defective  nature  of  the  paper  and  the  facility 
with  which  it  was  imitated,  attracted  the  attention  of  scientific  and  be- 
nevolent men,  who  endeavored,  by  writing  and  by  declamation,  to  pro- 
cure either  an  alteration  of  the  law  or  an  improvement  in  the  note.  The 
reluctance  of  juries  to  convict  was  evident  so  early  as  1819;  and  from 
that  period  it  continued  to  increase.  The  exactitude  with  which  the 
bank  circulation  was  copied,  and  the  ease  with  which,  therefore,  it  Avould 
deceive  the  intelligent  as  well  as  the  illiterate,  through  the  hands  of  the 
latter  of  whom  the  small  notes  principally  circulated,  was  proved,  to  use 
the  words  of  the  committee  of  the  Society  of  Arts,  by  "  the  notorious 
fact,  corroborated  by  evidence  produced  at  several  recent  trials,  that 
forged  notes  have  passed  undetected  through  the  scrutiny  of  the  bank 
inspectors."* 

The  above  committee  entered  into  an  investigation  to  ascertain 
whether  there  existed  any  means  within  the  compass  of  the  fine  or  the 
mechanical  arts  of  increasing  the  difficulty  of  imitation,  and  thus  of 
checking  the  prevalence  of  crime. 

The    conviction   that   some    check   was    necessary  grew   more    and 

*  Forgery,  it  must  be  remembered,  is  an  evil  inseparable  from  the  use  of  money 
— an  abatement  from  the  innumerable  advantages  of  which  it  has  been  productive. 
Whatever  commodity  maj'^  be  adopted  to  serve  as  a  circulating  medium,  it  must,  in 
the  nature  of  things,  be  a  hopeless  task  to  attempt  to  guard  completely  against  the 
efforts  of  the  issuers  of  spurious  money.  If  the  currency  consists  of  paper,  it  will 
be  counterfeited ;  and  if  it  consists  of  the  precious  metals,  they  will  be  adulterated 
and  debased.  All  that  can  be  done  is  to  throw  obstacles  in  the  way  of  forgery — to 
render  it,  if  possible,  a  work  of  extreme  difficulty ;  and  there  is  no  good  reason  for 
supposing  that  it  would  be  moi-e  difficult  to  do  this  with  notes  than  with  coins.  In- 
deed, the  very  contrary  seems  to  be  established, 

*  *  *  Money  is  by  far  the  most  important  of  all  the  measures  used  in  a  State ; 
and  if  it  be,  as  it  undoubtedly  is,  most  proper  and  expedient  to  take  measures  for 
rendering  all  foot-rules  of  the  same  length,  and  all  bushels  of  the  same  capacity,  it 
must  be  equally  proper  and  expedient  to  take  measures  to  prevent  any  variation  in 
the  measure  of  value,  or,  which  is  the  same  thing,  in  the  value  of  money.  The  jus- 
tice of  this  principle  is  obvious  ;  and  the  legislature  has  already  on  many  occasions 
recognised  it.  At  present,  the  notes  of  the  Bank  of  England,  and  of  the  country 
banks,  are  prevented  from  circulating  as  money  unless  they  are  made  jiayable  on 
demand ;  and  it  is  admitted,  on  all  hands,  that  this  is  a  most  proper  regulation. 
But  why  is  it  proper  ?  Because  it  prevents  any  considerable  excess  of  paper  getting 
into  circulation,  and  hinders  it,  so  long  as  it  continues  to  circulate,  from  being  de- 
preciated as  compared  with  gold. — Edinburgh  Jieview,  February/,  1826. 


228  History  of  the  Bank  of  England. 

more  peremptory  as  the  evils  of  the  system  were  exposed.  In  fourteen 
years  from  the  first  issue  of  small  notes,  the  number  of  convictions  was 
centupled.  In  the  ten  first  years  of  the  present  century,  £101,661  were 
refused  payment  on  the  plea  of  forgery.  In  the  two  years  preceding  the 
appointment  of  the  commission  directed  by  government  to  inquire  into 
the  facts  connected  with  forging  notes,  nearly  £60,000  were  presented, 
being  an  increase  of  300  per  cent.  In  1797,  the  entire  cost  of  prosecu- 
tions for  forgeries  was  £1,500,  and  in  the  last  three  months  of  1818  it 
was  near  £20,000.  Sir  Samuel  Romilly  said,  that  "pardons  were 
sometimes  found  necessary ;  but  few  were  granted  except  under  circum- 
stances of  peculiar  qualification  and  mitigation.  He  believed  the  sense 
and  feeling  of  the  people  of  England  were  against  the  punishment  of 
death  for  forgery.  It  was  clear  the  severity  of  the  punishment  had  not 
prevented  the  crimes." 

The  bank  directors  were  blamed  on  all  sides  for  their  presumed  apa- 
thy. Every  person  who  had  proposed  a  plan,  and  had  it  declined, 
joined  the  cry.  Every  disappointed  adventurer  who  had  asked  for  bank 
capital  to  carry  out  his  operations,  asserted  that  they  had  not  inquired 
into  the  particulars,  but  had  dismissed  an  excellent  proposal  without  due 
consideration. 

The  publication  of  the  truth  in  the  report  of  the  committee  exonerated 
the  establishment  from  charges  which,  if  true,  demanded  attention.  It 
has  been  already  stated  that  one  hundred  and  eight  projects,  regularly 
classified  and  arranged,  with  specimens  of  the  proposed  originals,  and 
successful  imitations  executed  by  the  bank  engraver,  were  placed  before 
the  commissioners,  who  concurred  in  the  opinion  that  neither  of  them 
could  have  been  advantageously  carried  into  effect.  Seventy  varieties  of 
paper  were  shown,  in  which  every  alteration  recommended  had  been 
tried ;  while,  in  some  instances,  the  directors  had  furnished  to  the  pro- 
posers the  pecuniary  means  of  carrying  their  ideas  into  effect.  It  has 
been  seen  that  the  result  of  the  inquiry  was,  that  in  July,  1820,  an  act  of 
Parliament  received  the  royal  assent  for  the  further  prevention  of  forging 
and  counterfeiting  bank  paper.  In  it  the  note  was  described,  and  the 
exclusive  privilege  of  using  this  plan  was  granted  to  the  bank.  By  the 
same  act,  the  governor  and  company  were  authorized  to  engrave  the  sig- 
natures on  the  notes  instead  of  signing  them,  as  heretofore ;  a  privilege, 
however,  of  which  they  have  not  found  it  convenient  to  avail  themselves. 
AYhat  one  man  can  engrave  another  can  imitate,  and  the  evil  contin- 
ued ;  altliough,  from  the  return  to  cash  payments,  and  the  diminution  of 
small  notes,  the  forgeries  also  diminished.  The  greatest  minds  in  Eng- 
land had  been  employed  in  attempting  to  alter  the  mischievous  nature  of 
the  law.  The  names  of  Sir  Samuel  Romilly  and  Sir  James  Mackintosh 
— men  who  lived  before  their  time,  and  who  can  only  be  fully  honored 
by  posterity — stand  proudly  and  prominently  in  the  van  of  improvement. 
They  died  without  witnessing  the  accomplishment  of  the  object  to  which 
much  of  their  energy  and  intellect  had  been  devoted.  But  since  that 
period  the  world  lias  moved  onward  in  the  great  march  of  civilization. 
Much  has  been  realized  that  our  forefathers  believed  to  be  impracticable. 
It  has  been  discovered  that  many  things  which  were  looked  upon  with 
an  almost  religious  veneration  as  unalterable  fiicts,  were  unalterable  ftilla- 


Endeavors  of  the  Press.  229 

cies.  We  are  becjinninG^  to  discover  that  cleanliness  is  a  vast  assistance 
to  morality  ;  tliatX'diication  is  the  right  of  the  poor  as  well  as  the  privi- 
lege of  the  rich.  We  liave  found  out  that  to  prevent  a  crime  is  better 
than  to  punish  it;  we  ])ave  discovered,  too,  and  it  has  penetrated  to  our 
commercifd  hearts,  that  it  will  cost  less  to  teach  a  man  to  be  good  than 
to  punish  him  for  being  bad. 

But  this  was  not  the  case  even  a  quarter  of  a  century  ago.  Men  were 
hung  in  strings.  Monday  mornings  witnessed  a  waste  of  human  life  alike 
horrifying  and  disgraceful.  Prosecutions  increased;  enormous  expenses 
were  incurred ;  "  examples  were  made,"  to  use  the  cant  of  the  period,  and 
what  was  the  result  ?  The  crime  continued.  From  one  or  two  manu- 
factories issued  most,  if  not  all,  the  forged  notes  which  were  in  circula- 
tion ;  and  the  manufacturer  of  thousands  remained  unscathed,  while  the 
issuer  of  one  was  hung.  They  were  sold  to  ignorant,  uneducated,  and 
almost  irresponsible  men,  for  a  few  shillings  in  the  pound ;  and  there 
were  always  a  sufhcient  number,  urged  by  want,  desire,  or  vice,  to  run 
the  risk  which  accompanied  their  circulation.  While  only  such  as  these 
were  punished,  the  great  mass  of  the  public  looked  upon  their  deaths  as 
virtuous  atonements  ;  and  thought  that  an  occasional  blood-letting  Mas  as 
good  for  a  nation  as  for  an  individual.  But  when  a  gentleman,  an  edu- 
cated man,  or  a  banker,  was  found  in  danger  of  the  same  punishment,  the 
morbid  sympathy  of  the  people  was  excited  ;  the  Perreaus,  the  Dodds, 
the  Rylands,  and  the  Fauntlerovs,  were  looked  upon  as  the  porcelain 
compared  with  the  common  clay,  and  every  exertion  was  made  to  save  them 
from  their  doom.  Thank  God,  that  since  then  we  have  discovered  amSn 
in  fustian  feels  as  much  as  a  gentleman  in  broadcloth — that  death  is  as 
difficult  to  the  hardfaring  as  to  the  luxurious  man — and  that  the  vicious 
poor  has  as  deep  ties,  as  warm  affections,  as  strong  sympathies,  where- 
with to  make  death  dreadful,  as  the  vicious  rich  man.  It  has  been  found 
that  the  punishment  of  the  crime  does  not  fall  solely  upon  the  criminal, 
but  that  the  agony  of  parting,  and  the  despair  of  the  fatal  moment,  is 
shared  by  the  parent,  the  wife,  the  child,  and  falls  with  an  equal,  and 
certainly  with  a  more  enduring  force,  upon  the  head  of  the  survivor,  who 
bears  the  agony,  the  ignominy,  and  the  shame,  without  having  partici- 
pated in  the  guilt. 

And  who  shall  say  how  many  have  been  unjustly  deprived  of  life,  and 
how  many  have  left  families  behind  them  unprotected,  untaught,  and 
compelled  either  to  follow  the  fatal  footsteps  of  their  parents  or  to 
starve  ? 

The  press  generally,  throughout  the  period,  bore  manful  testimony  to 
the  evil.  The  "  Edinbunih  Review''''  devoted  its  pages  to  the  topic  with 
an  energy  and  a  zeal  worthy  of  success.  "  No  subject,"  says  this  organ 
of  public  opinion,  "  so  deeply  or  so  constantly  engrossed  Sir  Samuel 
RoMiLLv's  regards,  as  the  severity  of  our  criminal  code.  He  was  the 
first  person  who  broached  the  question  fairly  and  systematically  in  Par- 
liament, and  he  shared  the  fate  of  all  propounders  of  change  in  any 
institution ;  he  was  derided  by  some,  pitied  by  others,  by  not  a  few 
execrated,  by  almost  all  regarded  as  the  advocate  of  a  desperate  cause." 
"Upon  Sir  Samtel  Romilly's  lamented  death,  the  reform  of  the  crimi- 
nal law  was  taken  up  by  Sir  James  Mackintosh,  with  congenial  feelings 


230  History  of  the  Bank  of  England. 

and  great  resources  of  learning,  plulosoplij',  and  eloquence,  and  a  large 
experience  derived  from  his  political  station.  All  the  friends  of  enlight- 
ened and  humane  legislation  cheerfully  rallied  round  so  able  a  leader ; 
and  he  was,  of  course,  vehemently  opposed  by  the  government  of  the 
country," 

"  The  bank  hangings  still  continue,"  says  one  authority,  witli  a  con- 
temptuous tone,  "  that  can  only  be  palliated  by  the  honesty  of  its  opinions 
and  the  importance  of  its  cause."  "  The  bank  prosecutions,"  says 
another,  "  are  increasing  to  a  frightful  extent.  At  the  April  sessions 
(1820)  there  were  more  than  forty  persons  under  capital  charges;  and 
though  only  a  fortnight  has  elapsed,  the  number  at  the  present  session  is 
twenty." 

The  circumstances  of  many  of  the  cases  were  strongly  represented. 
All  that  could  interest  the  feelings  was  brought  forward,  until  men  who 
were  sentenced  to  be  hung  began  to  look  upon  themselves  as  victims, 
were  carried  by  main  force  to  the  scaftbld,  yelling  vain  cries  of  murder 
from  its  fearful  height,  and  denouncing  all  connected  with  their  doom. 
And  yet  the  evil  continued.  Jurors  again  and  again  refused  to  convict 
upon  the  clearest  proof.  "  Men  were  every  day  seen  submitting  to  be 
plundered  by  forgers  rather  than  prosecute;  others  were  observed  to  favor 
in  all  ways  the  escape  of  the  worst  criminals,  by  suppressing  evidence, 
and  even  by  giving  in  verdicts  of  acquittal,  when  evidence  was  adduced 
that  sufficed  to  pi'ove  guiltiness."  Merchants  and  bankers  announced  that 
they  would  rather  lose  their  entire  fortunes  than  pour  forth  the  life  which 
it  was  not  theirs  to  give.  A  general  feeling  pervaded  the  whole  interest, 
that  it  would  be  better  to  peril  a  great  wrong  than  to  suffer  an  unavailing 
remorse.  One  petition  against  the  penalty  of  death  was  presented  which 
bore  three  names  only  ;  but  those  were  an  honorable  proof  of  the  preva- 
lent feeling.  The  name  of  Nathan  Meyer  Rothschild*  was  the  first, 
"  through  whose  hands,"  said  Mr.  Smith,  on  presenting  the  petition,  "  more 
bills  pass  than  through  those  of  any  twenty  firms  in  London."  The  second 
was  that  of  Overend,  Gurney  &  Co.,  through  whom  thirty  millions  passed 
the  preceding  year ;  and  the  third  was  that  of  Mr.  Sanderson,  ranking 
among  the  first  in  the  same  profession,  and  a  member  of  the  legislature. 

At  last  the  labors  of  the  press,  the  public  feeling,  and  an  increased 
regard  for  human  life,  produced  the  introduction  of  a  bill,  by  Sir  Robert 
Peel,  in  1830,  to  discontinue  the  punishment  of  death  in  certain  cases. 

It  is  worthy  of  notice  that  the  class  which  was  most  interested  in  the 


*  Mr.  Rothschild  was  not  celebrated  for  his  proficiency  iu  the  art  of  writing. 
This  defect,  on  one  occasion,  caused  him  some  little  annoyance.  He  was  travelling 
in  Scotland,  and,  on  his  return,  stopped  at  the  town  of  Montrose,  and,  wishing  to 
replenish  his  exhaust-ed  exchequer,  went  to  the  bank,  and  requested  cash  for  a  draft 
of  £100  on  his  agent  in  London.  He  was,  however,  much  surprised  at  the  refusal 
of  the  bank  manager  to  honor  his  check,  without,  as  he  said,  having  the  genuine- 
ness of  the  signature  (which  he  was  unable  to  read)  previously  accredited ;  and  for 
this  purpose  it  must  be  forwarded  to  London.  To  this  arrangement  Mr.  Rotuschild 
was  compelled  to  submit ;  and  as,  at  that  time,  it  took  six  daj's  before  an  answer 
could  be  received  from  London,  he  was  detained  until  the  rejily  came,  which,  of 
course,  proving  favorable,  he  Avas  enabled  to  pursue  his  journey.— Lawson's  ZTei^ory 
of  Banking. 


Inefficiency  of  Punishments — French  Forgeries.  231 

subject,  which  suftered  principally  from  the  crime,  and  whose  prejudices, 
therefore,  were  likely  to  be  strong,  by  the  memorable  petition  of  the  coun- 
try bankers  against  capital  punishment,  proclaimed  that  they  had  no  faith 
in  the  severity  of  the  law  to  protect  them.  With  nine  hundred  signa- 
tures to  the  petition,  signatures  of  men  who  had  an  interest  in  the  ques- 
tion, signatures  which  were  not  rashly  and  inconsiderately  given,  there 
was  no  reason  for  proceeding  with  the  penalty  on  the  ground  of  protec- 
tion to  these  classes.  Another  remarkable  fact  Avas,  that  there  was  no 
application  in  favor  of  the  punishment,  and  the  one  against  it  told  the 
plain  tale  that  the  banking  community  considered  the  punishment  of 
death  increased  forgery  instead  of  diminishing  it. 

When  the  bill  was  introduced  it  was  found  to  be  less  merciful  than  was 
anticipated  ;  and  after  a  solemn  and  careful  revision,  clauses  were  intro- 
duced in  the  lower  house,  by  which  the  capital  penalty  was  abolished  in 
all  cases  of  importance,  including  notes.  Sir  Robert  Peel  left  his  op- 
ponents to  carry  on  the  remainder  of  the  bill,  and  the  result  was  that  the 
good  cause  was  delayed  by  the  house  of  peers  rejecting  it.  But  the 
question  now  in  all  men's  minds  was  not  whether  capital  punishment  for 
forgery  would  be  abandoned,  but  when  ?  In  1832  it  was  settled,  and  all 
cases  were  excluded,  excepting  only  forgeries  of  wills  and  powers  of  at- 
torney. But  though  the  clause  was  maintained  in  the  bill,  no  one  sup- 
posed that  the  punishment  would  ever  be  inflicted  ;  and,  in  1836,  when 
the  forgery  of  a  power  of  attorney  was  discovered,  the  bank,  humanely 
and  judiciously,  declared  an  absence  of  all  wish  to  see  the  criminal  capi- 
tally punished  ;  and  the  cause  of  justice,  humanity  and  sound  principles 
prevailed. 

A  remarkable  evidence  of  the  inefficiency  of  these  punishments  arose 
from  the  execution  of  one  William  Welleb,  for  uttering  forged  bank 
notes.  "  From  the  very  room,"  says  the  "  Ne^o  Annual  Register,^''  "  in 
which  was  placed  the  coffin  with  his  corpse,  and  during  its  continuance 
in  that  room,  some  forged  bank  notes  have  been  uttered  by  his  confeder- 
ates. The  conclusions  are  as  obvious  as  irresistible.  These  facts  demon- 
strate the  total  inefficacy  of  the  punishment  of  death  for  the  suppression 
of  such  crimes.  In  all  future  and  approaching  discussions  they  should 
not  be  forgotten." 

Such  and  so  strong  was  the  feeling  against  the  punishment  that,  by 
the  Edinburgh  Heviewcr^s  testimony,  "men  suffered  losses  to  a  large 
amount,  and  repeatedly,  without  complaining,  because  they  knew  that 
their  complaint  was  the  death-warrant,  and  might  be  such  of  a  fel- 
low-creature. Others  who  could  give  evidence  kept  their  lips  sealed,  for 
fear  of  being  called  upon  as  witnesses,  should  it  be  known  that  they  pos- 
sessed any  criminal  information." 

But  it  was  not  only  with  the  English  fabricator  that  the  bank  had  to 
deal.  Alluding  to  the  question  under  consideration,  Mr.  Niciiolls  said, 
in  the  House  of  Commons:  "Forgeries  of  the  small  notes  had  made 
alarming  progress,  and  the  practices  of  our  own  government,  against 
France  and  America,  showed  the  impossibility  of  resisting  the  effects  of 
forgery.  They  had  been  encouraged  by  government,  and  even  our 
courts  of  justice  had  said,  that  to  depreciate  the  credit  of  an  enemy  by 
forging  its  paper  money  was  a  moral  act."     In  1820  a  very  extraordinary 


232  Historrj  of  the  Bank  of  England. 

appeal  was  made  to  the  French  tribunals  by  a  man  named  J.  Castel, 
who  was  a  merchant  in  Hamburgh,  while  the  free  city  was  in  the  hands 
of  the  French.  He  accused  the  general  commanding  there  of  employing 
him  to  get  five  thousand  pounds  worth  of  English  bank  notes  changed, 
which  proved  to  be  forged,  and  he  was  compelled,  in  consequence,  to  fly 
from  Hamburgh.  He  also  asserted  that  Savary,  Duke  of  Rovigo,  and 
Desnouettes,  were  the  fabricators,  and  that  they  employed  persons  to 
pass  them  in  England,  one  of  whom  was  seized  by  the  London  police, 
and  hanged. 

If  these  things  be  true,  and  if  our  government  practiced  thus  against 
America  and  France,  and  our  courts  of  law  called  them  "  moral  acts;"  if 
thus  a  regular  system  of  forgery  was  conducted  upon  a  great  scale,  and 
justified  because  it  had  great  ends  to  gain,  it  is  difficult  to  imagine  with 
what  degree  of  assurance  that  government  could  be  gifted  which  hung  a 
man  for  doing  in  a  small  what  they  did  themselves  in  an  enlarged  de- 
gree. But  whether  this  was  the  truth  or  not,  there  is  suflScient  collateral 
evidence  to  arrive  at  the  conclusion,  that  the  appeal  made  by  J.  Castel 
was  founded  on  fact.  During  the  last  wild  attempts  of  Napoleon,  when 
the  armed  league  of  the  monarchies  of  Europe  were  crushing  him  with 
fatal  effect,  Eugene  Beauharnais,  with  his  army,  was  compelled  to  re- 
treat from  his  Italian  vice-royalty.  Part  of  that  retreat  was  through  the 
Austrian  Tyrol.  As  they  passed  this  mountainous  region,  forged  notes 
of  the  Austrian  Bank  were  sold  by  them  for  any  sum  that  was  offered. 
The  small  baskets  of  the  country  were  filled,  and  sold  for  a  few  crowns, 
or  for  any  thing  that  the  peasantry  would  offer ;  and  there  yet  reside  in 
Tyrol  men  Avho  profited  by  the  opportunity,  who,  taking  advantage  of 
the  disturbed  state  of  Europe,  passed  with  their  counterfeit  notes  to 
Hungary,  where  they  purchased  large  droves  of  cattle,  and  other  articles 
valuable  in  their  native  country,  to  which  they  successfully  brought  the 
result  of  their  deliberate  frauds.  The  men  are  yet  living  ;  they  are  still 
pointed  out  by  their  contemporaries  ;  and  whatever  shame  may  attach  to 
them,  a  far  deeper  infamy,  and  a  more  enduring  degradation,  must  rest 
upon  that  imperial  head  which  contrived,  abetted  and  sanctioned  the 
crime.* 

*  King  William  said,  in  his  speech,  in  1836,  with  truth  and  discrimination :  "  The 
state  of  the  commerce  and  manufactures  of  the  United  Kingdom  is  highly  satisfac- 
tory. I  lament  that  any  class  of  my  subjects  should  still  suffer  distress,  and  the 
difficulties  which  continue  to  be  felt  in  important  branches  of  agriculture  may  de- 
serve your  inquiry,  with  a  view  of  ascertaining  whether  there  are  anj"^  measures 
which  Parliament  can  advantageously  adopt  for  the  alleviation  of  their  pressure." 
The  ruinously  low  prices  of  1835,  however,  and  the  unbounded  pauperism  which 
was  in  consequence  produced,  overcame  all  these  obstacles,  and  though  a  majority, 
both  of  the  Cabinet  and  the  House  of  Commons,  adhered  to  their  old  ideas  on  the 
subject,  yet  they  were,  in  a  manner,  constrained  to  yield  so  far  as  to  issue  a  com- 
mission to  inquire  into  the  condition  of  the  poor  in  Ireland, 


The  New  Charter.  233 


CHAPTER    XXI. 

THE  NEW  CHARTER ITS  CONDITIONS EXTRAORDINARY  DISCOVERY HOLIDAYS  ABOL- 
ISHED  FAILURE  OF  THE  GOVERNOR LONDON  AND  WESTMINSTER  BANK SPECULA- 
TIONS  IN    1836 PANIC DEMAND    FOR    BULLION ITS    CAUSE. 

The  charter  of  the  B.ank  of  England  again  occupied  the  attention  of 
the  House  of  Commons  in  1832.*  From  the  circumstances  which  had 
arisen  out  of  the  panic,  from  the  general  feeling  that  a  great  alteration 
must  take  place  in  its  construction,  and  from  the  ominous  remark  of 
Lord  Liverpool,  that  "  such  privileges  were  out  of  fashion,"  great  anxiety 
was  experienced  by  the  friends  of  the  corporation,  and  the  price  of  the 
stock  declined  from  202  to  185.  On  the  22d  of  May  the  question  was 
opened  by  Lord  Althorpe,  moving  for  a  committee  of  secrecy  to  report 
upon  the  expediency  of  renewing  the  bank  privileges,  which,  after  some 
desultory  remarks,  was  agreed  to  ;  and,  on  the  11th  of  August,  1832,  a 
brief  report  was  delivered,  accompanied  by  some  very  valuable  docu- 
ments, and  examinations  of  witnesses.  The  committee  arrived  at  no  con- 
clusion, in  consequence  of  the  limited  time  allowed  for  their  deliberations  ; 
but  the  report  was  satisfactory  to  the  proprietors  of  bank  stock  and  the 
public  generally.  The  following  is  the  conclusion  :  "  Of  the  ample  means 
of  the  Bank  of  England  to  meet  all  its  engagements,  and  of  the  high 
credit  which  it  has  always  possessed,  and  which  it  continues  to  deserve, 
no  man  who  reads  the  evidence  taken  before  this  committee  can  for  a 
moment  doubt ;  for  it  appears  that,  in  addition  to  the  surplus  rest  in  the 
hands  of  the  bank  itself,  amounting  to  £2,880,000,  the  capital  on  which 
interest  is  paid  to  the  proprietors,  and  for  which  the  State  is  debtor  to 
the  bank,  amounts  to  £14,553,000,  making  no  less  a  sum  than  £17,433,000 
over  and  above  all  its  liabilities." 

The  publication  of  the  report  was  believed  to  have  produced  a  benefi- 
cial result.  Many  who  had  previously  doubted  the  wisdom  of  the  manage- 
ment, found  their  doubts  removed,  and  were  disposed  to  regard  it  with 
more  favor  than  they  had  evinced  before  the  inquiry.  On  the  31st  of 
May  a  letter  was  placed  before  the  proprietors,  contaiuing  the  proposals 


*  Lord  Altuorpe  brought  forward  the  government  plan  on  the  subject  on  the  31st 
of  May,  "  to  allow  their  eireiilation  gradaally  to  diminish  when  the  exchanges  were 
against  this  country,  and  the  drain  of  bullion  became  great ;  and  Avhen  the  exchanges 
turned  in  our  favor,  and  the  bullion  came  back,  to  let  the  circulation  gradually  ex- 
pand in  proportion.  The  charter  Avas  to  be  renewed  for  twenty-one  years,  with 
power  to  the  government  at  the  end  of  ten  years  to  break  it  off.  '^Bank  of  England 
n'tes  were  to  be  made  a  legal  tender  every  where,  except  at  the  bank  itself  and  branch 
banks.  The  usury  laws  were  to  be  repealed,  to  the  effect  of  withdrawing  all  bills  at 
less  than  three  months  from  their  operation.  One-fourth  of  the  debt  due  by  the 
country  to  the  bank,  whidi  amounted  to  £14,000,000,  was  to  be  paid  off,  and 
£120,000  a  year  cut  off  from  the  allowance  made  to  that  establishment  for  carrying  on 
the  public  business,  and  royal  charters  were  to  be  granted  for  the  establishment  of 
joint-stock  banks  in  the  country  beyond  the  limits  of  the  bank's  monopoly." 


234  History  of  the  Bank  of  England. 

of  the  government ;  in  which  Lord  Althorpe  stated  that  the  only  relaxa- 
tion in  their  privileges  was  that  Avhich  allowed  joint-stock  banks,  more 
than  sixty-five  miles  from  the  metropolis,  to  draw  bills  and  issue  notes 
payable  in  London. 

The  following  clauses,  in  addition  to  the  declaratory  one  hereafter  to 
be  mentioned,  were  the  distinguishing  features  of  the  charter  of  1833  : 

"  That  while  the  Bank  of  England  is  liable  to  pay  gold  on  demand,  all 
the  notes  of  the  corporation  shall  be  made  a  legal  tender*  for  all  sums 
above  £5,  excepting  at  the  bank  itself  and  its  branches. 

"  That  one-fourth  of  the  debt  due  from  the  public  to  the  bank  be  re- 
paid, and  that  the  company  be  at  liberty  to  reduce  its  capital  stock  in  the 
same  proportion. 

"  That  the  laws  restricting  the  interest  of  money  to  £5  per  cent,  shall 
be  repealed,  so  far  as  they  affect  bills  of  exchange  not  having  three 
months  to  run  before  they  become  due. 

"  That  the  charter  shall  be  extended  for  twenty-one  years,  from  the 
1st  of  August,  1834,  with  power  to  the  existing  government  to  suspend 
its  privileges,  on  giving  one  year's  notice,  after  the  expiration  of  ten 
years. 

"  That  no  banking  company  of  more  than  six  partners,  within  sixty- 
five  miles  of  London,  shall  issue  notes  payable  on  demand. 

"That  all  notes  of  the  Bank  of  England  issued  out  of  London  shall  be 
payable  at  the  place  where  they  are  issued. 

"  That  a  weekly  account  of  the  bullion  and  securities,  the-  circulation 
and  the  deposits,  shall  be  forwarded  to  the  treasury,  an  average  of  which 
shall  be  published  quarterly. 

"  That,  in  consideration  of  its  exclusive  privileges,  the  bank  shall  pay 
£120,000  per  annum,  to  be  deducted  from  the  sura  allowed  for  man- 
aging the  national  debt." 

On  the  same  day,  also,  the  public  were  made  aware  of  the  terras  pro- 
posed by  Lord  Althorpe,  who  stated  that  the  principle  on  which  the 
bank  had  acted,  of  keeping  one-third  of  the  amount  of  its  liabilities  in 
bullion,  and  of  expanding  or  diminishing  the  circulation  in  proportion  as 
the  bullion  was  increased  or  diminished,  had  reason  and  experience  in  its 
favor.  The  question  of  permitting  one  bank  only  to  issue  paper  had 
been  maturely  deliberated,  and  the  result  was,  that  a  single  body  was 


*  It  is  certainly  true,  that  in  1814,  1815,  1816,  and  previously,  the  notes  of  the 
Bank  of  England,  and  of  the  country  banks,  were  not  payable  in  gold  at  the  pleasure 
of  the  holder.  But  the  circumstance  of  their  being  now  so  paj'able,  does  not,  and 
cannot  possibly  prevent  those  destructive  oscillations  in  the  amount  of  country 
paper,  though  its  tendency  is  to  lessen  the  extent  to  which  they  can  be  carried.. 
The  obligation  on  the  banks  to  pay  their  notes  in  gold  prevents  their  value,  so  long 
as  they  continue  to  circulate,  from  ever  varying  materially  from  the  value  of  gold  in 
the  home  market,  or  from  being  depreciated  as  comjjared  with  the  standard.  But 
though  one  part  of  our  currency  cannot,  under  our  present  system,  become  redun- 
dant, as  compared  with  the  other,  the  whole  currency,  gold  as  well  as  paper,  may 
become  redundant,  and  will  consequently  sink  in  value,  as  compared  with  the  cur- 
rency of  other  countries,  either  from  too  great  issues  being  made  by  the  Bank  of 
England,  or  by  the  country  banks.  Audit  is  next  to  impossible  that  the  contraction 
of  paper,  to  which  such  an  over-issue  must  ultimately  lead,  can  be  effected  witliout 
occasioning  a  most  destructive  revulsion. — Edinburgh  Review,  Feb.,  1826. 


Parliamentary  Debates.  235 

considered  better  than  rival  biinks,  provided  a  sufficient  check  could  be 
obtained.  The  check  proposed  was  a  weekly  return  to  the  treasury  of 
the  circulation  and  deposits,  with  the  bullion  and  securities  of  the  cor- 
poration, the  average  to  be  published  quarterly.  Hitherto  the  bank  had 
only  been  able  to  repress  the  circulation  by  reducing  the  discounts ;  and 
this  operated  disadvantageously  upon  the  commercial  interests.  By  a 
change  in  the  usury  laws,  all  bills  with  more  than  three  months  to  run 
would  be  exempted  from  their  operation.  For  these  privileges  the  bank 
were  to  allow  £120,000  a  year. 

Many  opinions  were  expressed  during  the  debates  on  this  important 
bill.  Mr.  PouLETT  Scrope  attributed  all  the  fluctuations  in  our  system 
to  the  monopoly  of  the  bank,  and  expressed  great  surprise  that  govern- 
ment should  wish  to  bend  down  the  country  to  those  task-masters, 
whose  stripes  were  yet  fresh  on  their  shoulders.  He  dreaded  this  increase 
of  power  to  the  corporation,  for  it  would  establish  a  more  complete 
tyranny  than  that  of  Napoleon  Bonaparte.  Sir  Robert  PEEL-thought 
the  contract  an  improvident  one  for  the  public,  and  this  was  clearly  indi- 
cated by  the  fact  that  bank  stock  had  risen  from  193  to  208.  He  objected 
strongly  to  making  bank  notes  a  legal  tender. 

Mr.  Fryer  believed  this  bill  would  render  the  gold  circulation  of  the 
country  unproductive.  If  thej'  were  to  return  the  gold  of  Potosi  to  the 
bowels  of  the  earth,  they  could  not  render  it  less  serviceable  than  it 
would  be  by  this  bill.  A  man  who  had  now  £30,000  in  gold  could 
scarcely  get  any  interest  for  it.  The  bank  stepped  in  with  its  cheap  rags 
and  prevented  him  from  using  it  to  advantage.  This  was  a  ruinous  sort 
of  competition  ;  it  was  like  that  of  the  Rob  Roy  and  Quicksilver  Brighton 
coaches.  The  Rob  Roy  offered  to  carry  passengers  cheaply  ;  but  the 
Quicksilver  offered  to  take  them  for  nothing,  and  find  them  a  bottle  of 
wine  on  the  road.  The  Rob  Roy  was  beaten  out  of  the  field,  and  the 
Quicksilver  was  run  away  with  and  smashed ;  and  that  would  be  the  re- 
sult with  the  bank.  Mr.  "Attavood  remarked,  that  the  old  banks,  both  in 
London  and  the  country,  had  one  fault — a  sordid  and  servile  devotion  to 
men  in  power — that  was  bad  enough  ;  but  the  joint-stock  banks,  which 
it  was  proposed  to  establish,  would  be  seven-fold  more  the  tools  of  the 
government  of  the  day,  because  they  would  all  be  under  the  Bank  of 
England,  and  that  establishment  was  under  the  immediate  control  of  gov- 
ernment ;  so  that  the  government  would  instruct  the  Bank  of  England  ; 
the  bank  would  instruct  the  branch  banks  ;  the  branch  banks  would  in- 
struct the  joint-stock  banks ;  the  joint-stock  banks  would  instruct  every 
one  of  their  partners ;  the  partners  would  instruct  their  debtors,  and  the 
people  of  England  would  rue  the  day  in  which  such  a  system  was  com- 
menced. He  was  more  than  ever  convinced  that  government  should  be 
the  sole  issuer  of  notes.* 

*  It  was  maintained  by  Lord  Althorpe  and  Mr.  Baring  :  "  The  objection  to  the 
declai'ing  bank  notes  a  legal  tender  arises  from  a  misconception  of  the  object  for 
■which  it  is  intended.  The  object  is  not  so  much  to  meet  the  demands  on  country 
bankers  for  their  notes,  as  those  for  their  deposits.  The  amount  of  notes  issued  by 
country  bankers  in  general  bears  but  a  very  small  proportion  to  their  engagements, 
on  account  of  deposits,  for  meeting  which  they  are  obliged,  in  times  of  pressure,  to 
apply  to  the  Bank  of  England  for  bullion.     It  is  to  guard  against  that  pressure  on 


236  History  of  the  Bank  of  England. 

Some  resolutions,  -with  regard  to  joint-stock  banks,  which  Lord  Al- 
TiiORPE  proposed  to  introduce  into  the  bill,  were  abandoned  in  consequence 
of  the  opposition  of  the  country  bankers;  and  one  of  the  most  remark- 
able evidences  occurred,  during  the  progress  of  this  charter,  of  the  im- 
plicit faith  of  men  in  that  which  every  one  declares  to  be  true,  from  the 
strange  discovery  that,  as  the  law  stood,  there  was  nothing  to  prevent 
joint-stock  banks  of  deposit  from  being  established  in  London,  nor  had 
there  been,  at  any  time,  an  enactment  to  that  effect.  A  clause  was, 
therefore,  introduced,  declaring  such  to  be  and  to  have  been  the  law, 
thus  saving  the  government  a  tedious  opposition  on  a  point  already  with- 
in their  power.  The  opinion  of  the  legal  authorities  was,  that  banks 
with  more  than  six  partners  might  exist  within  the  magic  circle,  but  not 
as  banks  of  issue. 

The  government  were  not  in  this  matter  so  straightforward  as  the  gov- 
ernment of  a  great  country  should  have  been.  The  basis  of  the  contract 
was  distinctly  understood  to  be,  that  all  the  exclusive  privileges  of  the 
bank  should  remain.  Among  them  was  that  which  made  the  existence 
of  joint-stock  banks  in  the  metropolis  a  violation  of  the  charter.  This 
was  the  full  conviction  of  all  who  considered  the  subject.  That  it  was  the 
firm  persuasion  of  the  directors  of  the  bank,  there  can  be  no  doubt.  That 
the  public  thought  so  is  equally  unquestionable,  or  banks  of  deposit,  with 
more  than  six  partners,  would  have  sprung  up  throughout  the  city. 
When,  therefore,  it  was  proposed  by  the  ministry  to  allo\y  these  banks  in 
London  and  its  immediate  vicinity,  the  proprietary  came  to  a  spirited 
resolution,  "That  the  court  feel  itself  bound,  injustice  to  its  own  cha- 
racter, to  protest  against  the  treatment  it  has  experienced  at  the  hands  of 
the  chancellor  of  the  exchequer,  who  has,  iil  the  opinion  of  this  court, 
most  improperly  and  unjustly  departed  from  the  terms  of  his  own  propo- 
sition ;  and  after  having  engaged  to  continue  certain  privileges  to  the 
bank,  on  consideration  of  stipulated  pecuniary  concessions,  has  since  de- 
termined to  withhold  from  the  bank  some  of  the  most  important  of  those 
privileges,  without  making  a  corresponding  abatement  in  the  pecuniary 
concessions.  That,  although  this  course  of  procedure  and  the  violation 
of  the  contract  fully  justified  the  bank  in  rejecting  the  arrangement  in 
toto,  this  court,  considering  the  extensive  injury  to  the  public  interest 
that  might  be  the  result,  and  considering  that  a  new  range  of  prices  had 
been  made,  in  the  conviction  that  the  question  was  settled,  is  unwilling 
to  assert  its  undoubted  rights  at  such  hazard,  and  authorizes  the  court  of 
directors  to  submit  to  the  arrangement." 

The  solicitor-general  maintained,  that  the  establishment  of  such  banks 
was  not  an  encroachment  on  the  privileges  of  the  Bank  of  England. 
lEc  had  looked  into  the  various  acts,  and  they  clearly  proved  that  mo- 
nopoly was  confined  to  the  issue  of  paper  money  within  sixty-five  miles 
of  the  metropolis.  That  monopoly  should  be  preserved.  Ue  was  pre- 
pared to  prove  that  the  act  referred  to  banks  of  issue  only. 

the  bank  that  it  has  been  deemed  advisable  to  make  the  bank  note  a  legal  tender ; 
for  in  a  case  of  comnicrcial  panic,  as  was  the  casein  1825,  the  country  bankers  sent 
up  to  London,  not  only  for  sovereigns  to  pay  their  notes,  but  likewise  for  gold,  to 
meet  their  other  eniragemcnts. 


Protest  of  the  Bank — Declaratory  Clause.  237 

The  reply  of  Mr.  Alderman  Thompson  was  what  a  direct  view  of  the 
question  must  necessarily  produce.  "  lie  had  a  right  to  contend  that 
the  interpretation  ho  had  put  upon  the  law  was  the  right  one,  because  it 
had  never  been  questioned  in  a  court  of  justice,  and  had  been  universally 
acted  upon  by  mercantile  men.  Lord  Althorpe  had  stated,  that  he  had 
no  intention  of  defrauding  the  bank  of  any  privileges  which  it  at  present 
enjoyed.  The  introduction,  however,  of  this  clause  would  have  that 
effect."  The  governor  addressed  a  letter  to  the  chancellor  of  the  ex- 
chequer, stating  that  the  stipulation  proposed  did  not,  cither  literally  or 
substantially,  carry  out  the  agreement  of  the  bank  with  the  government; 
that  it  took  away  their  exclusive  privileges  ;  but  that,  to  avoid  the  incon- 
venience of  farther  delay,  they  would  submit  to  it.  A  clause  to  the 
following  effect  was  inserted  :  "  That  any  body,  consisting  of  more  than 
six  persons,  rnay  carry  on  the  business  of  banking  in  London,  or  within 
sixty-five  miles  of  it,  provided  such  body  do  not  borrow,  owe  or  take  up, 
in  England,  any  sum  or  sums  of  money  on  their  bills  or  notes,  payable 
on  demand,  or  at  any  less  time  than  six  months  from  the  borrowing 
•thereof."  Uader  this  declaration,  any  bank  of  deposit  only  might  be 
established. 

There  can  be  no  question  that  government  availed  itself  of  an' unex- 
pected discovery  to  the  injury  of  the  company.  It  is  lamentable,  but 
true,  that  a  collective  body  will  sometimes  condescend  to  acts  which  each 
member  would  shrink  from  in  his  individual  capacity.  Lord  Altuorpe, 
a  most  upright  and  honorable  man,  admitted  that  he  had,  *'  in  aij  off- 
hand way,"  said,  "  that  he  did  not  intend  to  propose  the  establishment 
of  joint-stock  banks  in  London,  because  he  thought  such  was  the  law." 
Such  was  the  law  fully  believed  to  be  by  all  mefcantile  men.  The  privi- 
leges of  the  bank  had  been  supported  by  that  belief;  they  were  in  actual 
existence,  and  had  been  long  enjoyed  by  the  corporation.  They  may  be 
argued  away  by  special  pleading;  but  no  special  pleading  can  prevent 
the  fact  from  being  most  distinct,  that  for  more  than  a  century  the 
Bank  of  England,  by  virtue  of  one  act  of  Parliament,  possessed  certain 
prerogatives,  which  were  the  foundation  of  the  new  arrangement  with 
government,  and  contemplated  in  the  amount  of  payment ;  and  that  the 
latter,  finding,  by  a  novel  construction  of  the  deed,  they  might  be  abol- 
ished, did,  without  hesitation,  that  which  they  had  no  moral  claim  to  do, 
by  putting  in  force  this  new  interpretation  of  an  old  act  of  Parliament. 
No  wonder  such  conduct  was  impeached,  or  that  the  court  of  proprietors, 
justly  indignant  at  that  which  in  a  private  person  would  have  been 
deemed  a  breach  of  faith,  entered  the  important  protest  just  recorded. 

That  the  writer  is  justified  in  the  view  he  has  taken  is  confirmed  by 
the  following  extract  from  a  pamphlet  by  Mr.  Palmer,  who  says:  "A 
declaratory  clause  was  inserted  in  the  bank  charter  act,  authorizing  the 
establishment  of  those  bodies  in  the  metropolis.  It  is  conceived  that 
the  bank  had  the  more  reason  to  complain  of  the  minister's  proceedings 
upon  that  occasion,  it  having  been  distinctly  understood,  during  the  ne- 
gotiation, that  the  law  affecting  the  formation  of  banks  within  sixty 
miles  of  London  should  remain  untouched  ;  and,  upon  the  faith  of  that 
understanding,  Earl  Spencer  undertook  to  bring  the  bill  into  the  House 
of  Commons  for  the  renewal  of  the  charter  of  the  bank." 
16 


238  History  of  the  Bank  of  England. 

This  charter  was  important  from  many  causes.  The  weekly  account 
to  be  transmitted  to  the  lords  of  the  treasury  was  a  wise  provision,  as  it 
was  no  inconsiderable  check  upon  the  transactions  of  the  bank,  while  the 
publication  of  the  averages  every  quarter  could  produce  no  further  effect 
than  to  present  that  information  to  the  monetary  world  which  had  hither- 
to been  wanting.  But  a  yet  greater  object  was  achieved  in  the  alteration 
of  the  usury  laws,  as  the  first  relaxation  of  a  principle  which  had  weighed 
heavily  upon  the  claims  of  commerce.  The  payment  of  one-fourth  of 
the  debt  due  to  the  bank  was  in  consideration  of  the  loss  sustained  by 
the  latter  of  one  per  cent,  on  the  amount  lent  to  government. 

On  the  31st  July,  1834,  a  special  court  of  proprietors  was  held,  to 
agree  to  the  terras  proposed  of  paying  off  one-fourth  of  the  bank  capital. 
The  following  resolutions  were  passed  : 

"  That  a  proposal  from  the  chancellor  of  the  exchequer  to  transfer  to 
the  bank  the  sum  of  £4,080,000  three  per  cent,  reduced  annuities,  in 
liquidation  of  a  fourth  part  of  the  permanent  debt  due  to  the  bank, 
which  will  become  due  on  the  1st  of  August  next,  be  recommended  to 
the  proprietors  for  adoption  ;  provided  the  transfer  be  made  so  soon  as 
the  act  of  Parliament  shall  have  passed  authorizing  the  same,  and  the 
intei^st  on  the  returned  capital  be  paid  up  to  the  day  of  the  said  transfer. 

"  That  the  court  also  concur  in  opinion  with  the  court  of  directors, 
that  it  will  be  of  advantage  to  the  future  manaoement  of  the  affairs  of 
the  bank  to  retain  the  proportion  of  debt  when  repaid  by  government ; 
this  court  do,  therefore,  in  pursuance  of  the  authority  for  that  purpose, 
contained  in  the  act  of  3d  and  4th  William  IV.,  cap.  98,  determine  not 
to  divide  or  appropriate  the  sum  of  £3,638,250,  or  any  part  thereof, 
amongst  the  several  persons,  bodies  politic  or  corporate,  who  may  be  pro- 
prietors of  the  capital  stock  of  the  governor  and  company  of  the  Bank 
of  England  on  the  5th  of  October  next." 

By  an  act  passed  to  provide  for  the  repayment  of  the  sura,  it  was 
arranged  that  £4,080,000  reduced  three  per  cents  should  be  placed  to 
the  credit  of  the  Bank  of  England,  and  form  part  of  the  public  debt ; 
the  bank  to  receive  interest  from  the  1st  of  August,  1834,  until  the 
£4,080,000  should  be  written  in  their  books,  and  continue  a  corporation 
till  redeemed. 

In  the  same  year  the  bank  allowed  an  interest  of  two  per  cent,  on  the 
balances  of  the  East  India  Company,  as  an  inducement  to  the  latter  to 
allow  them  to  remain  in  their  possession.  In  this  year,  also,  the  new 
four  per  cents  were  reduced ;  and,  by  the  proposed  terms,  the  holders 
might  either  receive  £100  stock,  at  three  and  a  half  per  cent.,  nut  re- 
deemable until  1840,  or  £70,  at  £5  per  cent.,  not  redeemable  until  1873. 
The  principal  number  chose  the  former,  and  the  remainder  form  the 
holders  of  the  new  five  per  cents,  amounting  only  to  £430,000. 

In  1834  the  holidays  of  the  Bank  of  England,  which  had  been  pre- 
viously reduced  to  a  considerable  extent,  were  entirely  abolished.  The 
question  is  one  of  great  interest.  That  an  occasional  relaxation  of  the 
frame  is  desirable  to  the  toil-worn  and  the  weary  is  unquestionable,  and 
when  it  does  not  interfere  with  a  public  duty,  is  justice,  and  not  gener- 
osity. Men  were  not  born  to  labor  in  pent-up  cities,  breathing  an  im- 
pure atmosphere  from  morning  to  evening,  to  the  exclusion  of  all  that  is 


Failure  of  the  Governor.  239 

natural  and  healthful.  Our  forefathers  were  wiser  than  their  descendants. 
They  knew  that  to  grant  their  servants  a  recreation  was  to  benefit  them- 
selves. That  to  mingle  with  them  in  their  sports,  and  to  encourage 
them  in  invigorating  pastimes,  was  politic  as  well  as  pleasant ;  and  this 
great  fact  will  once"  more  be  comprehended,  because  it  is  a  question  of 
self-interest.  It  will  yet  be  understood  that  a  day  passed  in  the  greeu 
fields,  in  the  fresh  air,  or  on  the  gay  river,  produces  a  desire  no  less  than 
a  capacity  to  serve  ;  and  that  to  make  a  man  believe  that  his  interests 
are  cared  for,  will  induce  him  to  regard  the  interests  of  his  employer  in 
a  tenfold  degree.  These  things  are  not  written  of  the  Bank  of  England. 
The  writer  rejoices  in  bearing  testimony  to  their  great  and  honorable 
liberality ;  and  it  is  a  curious  incident  in  the  history  of  the  holidays,  that 
the  very  persons  by  whose  solicitation  they  are  stated  to  have  been 
abolished,  made,  at  a  subsequent  period,  an  application  to  have  them  re- 
stored. 

In  1834  a  great  sensation  was  created  throughout  England  by  a  cir- 
cumstance which  was  only  important  from  its  connection  with  the  corpo- 
ration. Mr.  Richard  Mee  Raikes,  governor  of  the  bank,  a  gentleman 
universally  respected,  was  compelled,  from  various  unforeseen  events,  to 
announce  a  suspension  of  payments,  which  was  followed  by  the  appear- 
ance of  his  name  in  the  list  of  bankrupts.  The  rumor  spread  among  the 
less-informed  class — among  the  dwellers  in  the  suburbs,  and  the  inhabi- 
tants of  the  country,  that  the  governor  of  the  bank  had  foiled.  The 
annuitants  and  small  class  of  fund-holders,  who  look  upon  the  head  of 
the  establishment  as  an  integral  part  of  the  corporation,  regarded  their 
fortunes  gone,  and  their  property  forfeited.  The  autumn  dividends  were 
just  due  ;  and  it  was  remarkable  to  witness  the  earnestness  with  which 
they  were  applied  for.  The  offices  were  crowded  with  applicants ;  and, 
if  the  slightest  delay  occurred,  though  occasioned  by  their  own  igno- 
rance, they  regarded  it  as  an  invidious  delay  of  their  rights,  and  a  con- 
firmation of  their  fears.  Time,  however,  in  this  as  in  other  things, 
brouo-ht  "  healins:  on  its  wincfs,"  and  confidence  to  the  breasts  of  the 
public  creditors. 

The  commencement  of  banks  in  the  metropolis  with  more  than  six 
partners  demands  a  brief  remark.  "The  London  and  Westminster 
Bank"  and  "  London  Joint-Stock  Bank"  were  the  first  establishments  of 
the  kind,  and,  from  a  combination  of  causes,  have  commanded  complete 
success.  Mr.  Gilbart  has,  in  his  history  and  principles  of  banking, 
discussed,  in  a  very  able  manner,  the  comparative  merits  of  joint-stock 
banks  and  private  banking-houses;  and,  though  he  may  be  regarded  as  a 
partial,  if  not  a  prejudiced  writer,  there  is  an  equitable  statement  of 
truths  in  his  essay,  which  demand  respect,  at  whatever  opinion  the 
reader  may  arrive.  The  formation  of  the  bank  to  which  this  gentleman 
is  attached  is  memorable  from  the  dislike  evinced  to  it  by  the  private 
bankers  refusing  to  allow  a  clerk  from  the  new  establishment  to  attend  at 
the  clearing-house.  The  directors  of  the  "  London  and  Westminster" 
also  considered  themselves  aggrieved,  because  the  Bank  of  England  de- 
clined to  allow  them  a  drawing  account,  and  alluded  to  both  these  cir- 
cumstances in  their  yearly  report.     Such  occurrences  are  incidental  to 


240  History  of  the  Bank  of  England. 

all  new  concerns,  and  the  rights  of  the  bank  stock  proprietors  arc  the 
boiinden  charge  of  those  whom  they  choose  to  manage  their  affairs. 

In  1834  the  new  bank  applied  to  the  House  of  Commons  for  the 
privilege  of  suing  and  being  sued,  by  its  chairman.  Considerable  oppo- 
sition was  shown ;  and  Lord  Altiiorpe,  who  thought  that  Parliament 
Avould  not  be  justified  in  granting  the  application,  moved  "that  the  bill 
be  read  that  day  six  months."  It  was  stated,  however,  that  this  bank 
had  been  established  on  the  faith  of  the  declaratory  clause  introduced  by 
Lord  Altiiorpe,  and  that,  out  of  seventy  private  banks,  twenty-two  had 
failed,  in  twelve  years,  to  the  amount  of  seven  millions,  of  which  four 
millions  had  never  been  paid.  The  bill  went  through  the  lower,  was  in- 
troduced to  the  upper  house,  and  there,  after  the  expression  of  Earl 
Grey  that  it  would  be  inconsistent  with  the  exclusive  privileges  of  the 
bank,  it  was  resolved  that  certain  questions  should  be  framed  for  the 
consideration  of  the  judges.  These  learned  gentlemen  declined  an- 
swering them,  and,  as  the  session  was  near  its  close,  the  bill  was  with- 
drawn. 

In  1834  symptoms  of  a  dormant  spirit  of  speculation  might  have  been 
discovered  in  various  propositions  for  foreign  loans,  joint-stock  banks, 
and  one,  the  London  and  Southampton  Railway.  The  year  1835  wit- 
nessed a  continuance  of  the  same  spirit ;  and  in  May,  of  that  year,  the 
speculation  in  Spanish  funds,  which  had  been  extensively  carried  on, 
suddenly  exploded.  The  bullion  began  to  flow  out  of  the  bank,  and  by 
the  2d  of  June  it  was  reduced  to  £6,150,000.  In  the  following  August 
a  notice  was  issued  by  the  bank,  that  advances  would  be  made  on  ex- 
chequer bills,  India  bonds,  stock,  and  other  approved  securities,  at  3-^ 
per  cent. ;  the  previous  rate  for  similar  advances  being  4  per  cent.  In 
August,  1835,  the  proposition  for  the  West  India  loan  was  made;  and, 
in  the  opinion  of  those  opposed  to  the  bank,  the  above  reduction  of  in- 
terest added  a  stimulus  to  the  excitement  then  prevalent.  The  bullion 
in  the  coffers  of  the  bank,  which,  on  the  average  of  the  three  months  be- 
fore October,  1833,  had  been  £10,900,000,  had  fallen  by  the  June 
average  of  1835  to  £6,150,000.  This  reduction  was  considered  by  Mr. 
Palmer,  in  his  "  Causes  and  consequences  of  the  pressure  upon  the 
money  market,"  to  arise  from  the  loans  to  Portugal  and  Spain.  "  These 
loans  were  going  forward  from  July,  1833,  until  towards  the  end  of  1834, 
when  the  profits  realized  upon  the  daily  extending  engagements  in  the 
foreign  stock  market  engendered  a  further  spirit  of  speculation  in  almost 
every  kind  of  previously  neglected  South  American,  Spanish  and  Portu- 
guese bonds,  causing  an  enormous  advance  in  all,  and  in  some  nearly  100 
per  cent.  In  short,  until  the  spring  of  1835,  hardly  a  packet  arrived 
from  the  continent  which  did  not  come  loaded  with  every  sort  of  foreign 
securities  for  realization  upon  our  foreign  stock  market."  But  other 
causes  were  in  operation,  one  of  which  is  to  be  found  in  the  measures 
taken  by  President  Jackson  to  establish  a  metallic  currency  in  the 
United  States,  which  partially  assisted  to  drain  the  vaults  of  the  Bank  of 
England.  The  demand  ceased  in  May,  1835;  and  the  directors  in- 
creased their  circulation  to  the  extent  of  five  millions,  from  August  to  the 
close  of  the  year. 

The  late  Lord  Sydenham  (then  Mr.  Poulett  Thompson)  caused  a 


Speculations  q/ 1836 — Their  Result. 


241 


register  of  the  various  companies  to  be  kept,  the  number  of  which, 
amounted  to  between  two  and  three  hundred  in  1836,  with  an  aggregate 
capital  of  about  two  millions.  Joint-stock  banks  were  a  favorite  invest- 
ment, and  the  shares  of  nearly  all  these  companies  bore  a  premium. 
Railways,  also,  from  the  success  of  the  Liverpool  and  Manchester,  were 
freely  entered  into.  Mr.  Tooke,  in  his  "  History  of  Prices,"  says,  "  new 
lines  were  proposed  to  intersect  almost  every  part  of  the  kingdom,  and 
there  was  actually  a  swarm  of  railway  projects  starting  up  in  every  direc- 
tion. The  rage  for  undertakings  of  this  kind  was  at  its  height  in  the 
spring  of  1836,  and  numerous  other  projects  for  public  companies  were 
at  the  same  time  brought  into  notice.  The  most  considerable  of  these 
were  for  mining  purposes.  And  several  of  the  projects  proceeded  on 
substantial  grounds  with  fair  prospects  of  success,  along  with  many  others 
that  were  absolutely  worthless,  and  served  only  for  the  individual  benefit 
of  the  projectors.  But  the  good,  bad  and  indifterent,  contributed  to  a 
general  activity  of  the  share  markets." 

In  July,  1836,*  the  rate  of  interest  was  raised  by  the  bank  to  four  and 
a  half,  and  in  August  to  five  per  cent.  Those  opposed  to  the  establish- 
ment again  blamed  this  policy,  as  too  sudden  a  contraction  of  the  cur- 
rency. It  was  about  this  period,  also,  that  the  bank  reduced  their  loans 
by  refusing  to  discount  all  bills  drawn  or  endorsed  by  joint-stock  banks 
of  issue,  together  with  an  immense  amount  of  bills  drawn  from  America, 
on  and  accepted  by  several  first-rate  establishments  in  this  country,  al- 
though the  acceptors  were  considered  to  be  of  the  most  unquestionable 
solidity.  The  Chamber  of  Commerce  at  Manchester  estimated  the  loss 
on  cotton,  wool,  silk,  linen  and  hardware,  at  forty  millions,  in  addition  to 
the  moral  and  social  evils  which  follow  the  deprivation  of  employment  to 
the  working  classes. 

The  customary  result  of  the  wild  love  of  speculation  of  1836,  to  which 
allusion  has  been  made,  was  witnessed  in  panic,  prostrate  credit,  languid 
commercial  operations,  and  a  drain  upon  the  Bank  of  England.  The 
joint-stock  banks  felt  the  pressure.  The  Agricultural  and  Commercial 
Bank  of  Ireland  suspended  payments  ;  and  a  fearful  panic,  from  the  stop- 
page of  the  Northern  and  Central  Bank  of  Manchester,  with  numerous 
branches,  was  only  prevented  by  the  assistance  of  the  Bank  of  England. 
During  this  period  the  bullion  had  been  again  diminishing,  and  on  the 
iVth  of  November  it  had  fallen  to  £4,933,000,  and  a  fortnight  after  the 
determination  had  been  taken  to  support  the  Northern  and  Central  Bank, 
an  account  of  which  is  given  at  a  later  period,  it  fell  to  £4,545,000.    The 


*The  prices  of  bank  stock  from  1830  to  1836  were  not  wide  apart,  the  lowest 
being  185,  and  the  highest  225,  viz.  : 


Lowest. 

1830, 194 

1831, 189 

1832, 185 

1833, 190 

1834, 211 

1835, 208 

1836, 199 


Highest. 
203 
204 
208 
213 
225 
225 
219 


Dividends. 
8  per  cent. 
8 


8 


Consols. 
11i  @  94i 
741  @  84i 
81f  @  85f 
84i-  @  9l| 
87i  @  93 
89i  @  92| 
86f  @  92^ 


242  History  of  the  Bank  of  England. 

great  importance  of  the  corporation  was  experienced  in  its  resolution  to 
support*  commercial  credit ;  but  the  panicf  was,  as  usual,  productive  of 
many  opinions  as  to  the  cause. 

A  pamphlet,  published  by  Mr.  Horsley  Palmer,  attracted  great  atten- 
tion ;  answers  poured  from  the  press  in  attempts  to  disprove  one  of  the 
positions  assumed  by  him,  that  it  was  owing  to  the  mismanagement  and 
over-issue  of  the  joint-stock  banks.  Mr.  David  Salomons  replied,  and, 
among  other  causes,  attributed  the  derangement  of  the  currency  to  the 
"  transaction  between  government,  the  public  and  the  Bank  of  England, 
connected  with  the  West  India  loan,"  "  The  joint-stock  banks,"  says  Mr. 
Salomons,  "  do  not  hesitate  to  repel  the  charge,  and  to  accuse  the  Bank 
of  England  of  having  caused  the  mischief  which  they  attempt  to  lay  to 
the  account  of  the  joint-stock  banks."  Mr.  Samuel  Jones  Lloyd,  Mr. 
Samson  Kicakdo,  with  others,  entered  the  lists,  either  in  defence  of  the 
joint-stock  banks,  or  in  attack  upon  the  Bank  of  England.  And  the 
question  closed,  doubtless,  with  the  conviction  of  each,  that  his  own 
theory  was  demonstrated. 

*  At  this  period  England  was  aware  and  acknowledged  her  dependence  upon  the 
United  States  as  a  market.  In  1842,  it  was  contended  by  Lord  John  Ri'ssell  and 
Lord  Palmerston:  "We  are  not,  we  cannot  be  independent  of  foreign  nations,  any 
more  than  they  can  of  us.  At  least  five  millions  of  our  people  are  dependent  on  the 
supplies  of  cotton  from  America,  of  foreign  wool,  or  foreign  silk.  Independence  of 
other  countries,  therefore,  is  a  chimera  which  it  is  in  vain  for  a  great  commercial 
nation  to  pursue  ;  and  even  were  it  reached,  it  would  be  attended  with  no  visible 
benefit.  It  is  impossible  that  the  time  should  ever  arise  when  you  might  not  find 
some  part  of  the  world  from  which  you  might  derive  your  supplies.  The  true  inde- 
pendence of  a  great  commercial  nation  is  to  be  found,  not  in  raising  all  the  produce 
it  requires  within  its  own  bounds,  but  in  attaining  such  a  pre-eminence  in  commerce 
that  the  time  can  never  arise  when  other  nations  will  not  be  compelled,  for  their 
own  sakes,  to  minister  to  its  wants.  There  is  nothing  of  such  importance  to  this 
country  as  to  extend  its  commercial  relations  with  the  United  States  of  America. 
Were  a  free  commercial  intercourse  established  with  them,  there  is  no  saying  how 
long  you  might  continue  to  furnish  them  with  manufactured  goods,  or  how  extensive 
and  lucrative  might  be  the  commerce  you  might  carry  on  with  them.  However 
rising  may  be  the  manufactures  of  the  United  States,  there  is  not  enough  of  that 
species  of  industry,  and  probably  there  will  not  be  for  a  very  long  time,  to  furnish 
with  clothes  and  other  articles  of  rude  comfort  this  great  population." — Alison's 
Europe. 

\  Early  in  1837  the  revulsion  in  the  money  markets  of  the  United  States  occurred, 
preceded  and  caused  by  a  rapid  enlargement  of  the  circulation  of  the  State  banks. 
This  created  in  London  a  distrust  of  American  bankers  and  commission  merchants 
doing  business  in  London.  By  the  withdrawal  of  customary  facilities  to  these,  they 
failed.  From  the  published  statements  of  the  concerns  of  several  of  the  suspended 
London  houses,  it  appears  that  there  was  due  and  coming  due  to  them  from  the 
United  States,  about  1st  June,  as  follows,  viz.: 

To  Messrs.  Thomas  Wilson  &  Co., £  1,350,000 

To  Messrs.  Timothy  Wiggin  &  Co., 1,450,000 

To  Messrs.  George  Wildes  &  Co., 1,000,000 

£  3,800,000 
And  due  to  other  London  houses,  and  to  Liverpool,  Manchester,  &,c.,  5,000,000 
And  to  France 1,500,000 


£  10,300,000 


Loss  of  the  Northern  and  Central  Bank.  243 


CHAPTER  XXII. 

LOSS   OF    THE    NORTHERN  AND    CENTRAL  BANK APPLICATION    FOR    ASSISTANCE,    NOVEMBER, 

1836 STIPULATIONS   DEMANDED DIRECTORS    AT    MANCHESTER PRIVATE   LEDGER AP- 
PLICATION    OF    MR.      FRESHFIELD ITS      SUCCESS CURIOUS      DISCOVERIES — FAILURE      OF 

ESDAILE    AND    CO.,    BANKERS ALARM    AND    ASSISTANCE  OF    THE    BANKERS DIFFICULTIES 

OF   AMERICAN   HOUSES SUSPENSION FOREIGN    CREDIT AID     BY    THE    BANK    OF    FRANCE 

TO     THE    BANK     OF     ENGLAND DRAIN     OF    GOLD RESTORATION     OF     CONFIDENCE NEW 

MODE    OF   MANIFOLDING    BASK    NOTES SUIT     AGAINST    THE    LONDON    AND    WESTMINSTER 

BANK,  APRIL,   ISST. 

The  committee  appointed  on  joint-stock  banks  of  issue  in  1836  pro- 
duced some  curious  disclosures.*  The  Northern  and  Central  Bank  of 
Manchester  occupied  a  great  part  of  its  time,  and  the  following  are  its 
most  important  results,  in  connection  with  a  transaction  which  occa- 
sioned considerable  comment.  In  1834  this  bank  was  established, 
with  a  paid-up  capital  of  £710,000  and  1,200  shareholders,  the  united 
property  of  whom  was  considered  equal  to  ten  millions.  Not  one  of 
the  directors  had  previously  been  engaged  in  banking,  and,  unfortu- 
nately, they  were  prosperous  to  a  great  extent,  at  the  commencement 
of  their  business,  as  it  induced  them  to  extend  their  branches  in  thirty- 
nine  towns,  without  an  adequate  capital,  and  probably  gave  them  an  idea 
of  the  ease  with  which  a  banking  connection  might  be  formed,  while  it 
deprived  them  of  the  caution  necessaiy  to  conduct  it  to  a  successful  issue. 
The  rule  which  the  Bank  of  England  had  constituted,  not  to  discount  any 


*  The  effects  of  the  extraordinary  flood  of  prosperity,  the  result  of  the  important 
change  made  upon  the  currency  laws  in  1834,  by  declaring  Bank  of  England  notes 
a  legal  tender  everywhere  but  at  the  Bank  of  England,  already  noticed,  were  very 
important,  and  are  still  felt  in  various  branches  of  industry  and  social  economy — 
money  being  abundant,  and  the  terrors  of  the  bankers  of  a  run  upon  them  for  gold 
allayed  by  this  great  change.  Advances  were  liberally  made  to  carry  on  mercan- 
tile undertakings,  and  both  railway  and  banking  speculations  exhibited  a  rapid 
increase.  In  the  three  years  ending  with  1835  thirty-four  joint-stock  banks  were 
established;  and  in  1836  no  less  than  forty-four  new  ones  were  set  up — making  in 
all  two  hundred  joint-stock  banks,  with  six  hundred  and  seventy  branches,  all  founded 
since  the  joint-stock  system  had  been  established  in  1826.  The  issues  of  the  country 
banks  increased  in  a  similar  proportion.  In  the  year  1836  they  rose  £1,500,000. 
Railway  speculations  underwent  a  similar  increase.  The  number  of  bills  for  estab- 
lishing new  lines  augmented  from  eleven  in  1833  to  thirty-five  in  1836  and  forty-two 
in  1837,  and  the  capital  expended  in  them  swelled  from  £2,312,000  in  1834  to 
£22,874,000  in  1836.  These  four  seasons  in  succession,  at  the  same  time,  lowered 
the  price  of  provisions  to  an  unprecedented  degree — from  55s.  9d.  in  1832,  wheat 
fell  to  35s.  9d.  in  1835.  In  a  word,  the  perilous  tendency  of  a  circulation  based  en- 
tirely on  the  retention  of  gold,  was,  during  these  years,  unequivocally  evinced  in  a 
way  directly  the  reverse  of  what  had  hitherto  been  experienced,  but  not  less 
fatal ;  for  exchange  during  those  years  being  favorable,  and  the  export  of  gold 
email,  paper  was  issued  in  abundance,  and  speculation  went  on  wildly  and  extrava- 
gantly.— Alison's  Eiirope. 


244  History  of  the  Bank  of  England. 

bill  endorsed  by  a  joint-stock  bank  of  issue,  was,  however,  felt  severely 
by  the  managers  of  the  Northern  and  Central,  who  found  their  paper 
refused  by  the  discount  houses  of  London,  not  because  it  was  doubtful, 
but  because  it  was  impossible  to  re-discount  it;  as  paper  possessing  the 
endorsements  alluded  to,  although  it  had  the  signatures  of  the  first  bank- 
ers in  the  city,  was  sure  to  be  rejected. 

Mr.  GiLBART  stated  it  as  his  belief,  that  "  this  arose  from  the  hostility 
of  the  Bank  of  England  to  joint-stock  banks  of  issue,  and  they  regarded 
them  as  rivals."  But  the  idea  of  rivalry  between  the  great  bank  of  the 
empire  and  a  provincial  joint-stock  bank  is  scarcely  probable.  It  is  more 
likely  to  have  had  its  rise  in  the  hope  of  restraining  these  banks  from 
that  over-trading,  in  which,  at  a  future  period,  many  were  found  to  have 
indulged. 

The  mode  of  allotting  shares  was  a  remarkable  feature  in  the  history  of 
these  establishments.  By  some  pertinent  questions  of  Sir  Robert  Peel, 
it  was  ascertained  that  shares  in  some  of  these  banks  were  awarded  to  others 
at  par,  not  for  the  establishment,  but  for  the  directors  ;  that,  ''  if  shares 
were  allotted  to  A.  B.  C,  and  A.  B,  C.  could  not  take  them,  the  direct- 
ors made  the  profit,"  and  that  "part  of  the  profits  of  the  Northern  and 
Central  Bank  were  made  by  allotting  shares  at  a  premium."  "  It  was 
usual,"  said  one  of  the  witnesses,  "  if  you  take  an  account  to  any  bank, 
to  have  shares  granted  you  if  you  apply  for  them."  Thns  the  Northern 
and  Central  Bank  received  shares  from  the  London  and  Westminster,  the 
Yorkshire  District  Bank,  and  the  Royal  Bank  of  Ireland,  These  shares 
were  not  only  divided  among  the  directors  for  their  private  advantage, 
but  the  deposits  were  paid  out  of  the  funds  of  the  Northern  and  Central 
Bank,  to  the  amount  of  more  than  £50,000  ;  and  as  this  narrative  pro- 
ceeds, it  will  be  found  that  the  most  unbusiness-like  transactions  were 
carried  on.  It  must^  however,  be  remembered,  in  extenuation,  that  bank- 
ing is  a  science,  and  that  the  directors  of  the  Northern  and  Central  Bank 
were  utterly  ignorant  of  its  principles. 

The  pressure  experienced  throughout  England  in  1836,  and  the  gene- 
ral difficulty  in  obtaining  discounts,  was  first  felt  by  the  managers  in  Au- 
gust. "The  cause  of  our  distress,"  said  Mr.  Moult,  the  chairman,  "was, 
that  the  Bank  of  England  had  set  their  face  against  discounting  our 
paper,  or  the  paper  of  any  joint-stock  bank  of  issue,"  The  difficulties, 
however,  had  their  origin  in  overdrawn  accounts.     Up  to  June,  1836,* 

*  The  leading  events  bearing  upon  commercial  and  financial  affairs  for  the  five 
previous  years  (1831-1835)  were  as  follows : 

1831. — Parliamentary  reform  bill  introduced  in  1831  by  Lord  John  Russell,  re- 
jected by  the  House  of  Lords,  8th  October.  The  Bristol  riots  among  the  reformers 
occasioned  by  the  visit  of  the  recorder,  October  29th;  four  persons  executed  in  1832 
for  participation  in  the  riots.  Free  trade  convention  at  Philadelphia,  October  1. 
Stephen  Girard  died,  26th  December,  aged  84.  Insurrection  in  Jamaica,  28th  De- 
cember. 1832. — Third  reading  of  the  reform  bill  carried  in  House  of  Commons,  Feb- 
ruary 22,  by  a  majority  of  109.  France  agrees  to  pay  25,000,000  francs  to  American 
claimants.  Attack  by  tlie  American  frigate  Potojnac  on  the  Malay  pirates.  Veto 
of  United  States  Bank  bill  by  President  Jackson,  10th  July.  New  tariff  act  passed 
by  Congress,  July.  Ohio  State  Canal  finished.  Albany  and  Schenectady  Rail-Road, 
Columbia  Rail-Road,  Pennsylvania  Rail-Road,  Newcastle  and  Frenchtown  Rail-Road, 
completed.    1833. — English  duty  on  advertisements  reduced  from  3s.  6d.  to  Is,  6d., 


Great  Loss.  245 

no  distress  had  been  experienced,  and  the  managers  believed  themselves 
so  strong  in  a  paid-up  capital  of  more  than  half  a  million,  that  nothing 
could  injure  them.  Great  losses  were,  however,  sustained  in  the  branches, 
and  these,  with  the  scarcity  of  money  already  alluded  to,  contributed  to 
add  to  their  troubles.  Mr.  Cassels,  agent  in  London,  wrote  to  the  head 
bank  that  money  was  very  scarce,  and  advised  the  directors  to  obtain 
discounts  in  the  country,  and  send  up  all  the  cash  they  could  gather,  as 
a  large  amount  would  be  required.  On  this  urgent  application  for  assist- 
ance £108,000  were  procured,  and  intrusted  to  Mr.  Evans,  manager  at 
Manchester,  who  arrived  in  town  on  the  28th  of  November,  183(5.  In 
St.  Martin's-le-Grand  he  called  a  conveyance,  which  took  him  to  his 
hotel.  "  My  mind  was  very  much  engaged  upon  the  state  of  things  gen- 
erally," said  this  gentleman,  in  his  examination  before  the  committee  of 
the  House  of  Commons,  "  and  the  matters  I  should  have  to  discuss ;  and 
at  the  moment  of  leaving  the  cab,  I  lost  sight  of  the  bag  which  contained 
the  money,  and  left  it  behind  me."  This  alarming  discovery  was  almost 
immediately  made,  and  in  no  very  enviable  state  of  mind  he  ran  with  all 
possible  speed  to  overtake  the  conveyance.  The  attempt  was  vain ;  and 
Mr.  Evans  instantly  sought  the  authorities  at  the  Mansion  House,  com- 
municated with  Forrester,  and,  assisted  by  Mr.  Bush,  solicitor  to  the 
bankers,  took  the  best  measures  which  they  could  devise  together  to 
recover  the  property. 

The  loss  was  of  the  utmost  importance.  It  was  felt  that  the  rumor  of  such 
an  occurrence  would  aftect  the  Northern  and  Central  Bank  very  seriously. 
Mr.  Evans,  therefore,  accompanied  by  Mr.  Bbaidley,  determined  to  seek 
the  assistance  of  the  Bank  of  England,  and  at  five  o'clock  on  the  same 
day  they  procured  an  interview  with  the  governor.  Mr.  Braidley 
remarked,  before  the  committee,  "the  loss  of  the  parcel  having  become 
known,  it  occurred  to  him  that,  if  published  in  the  newspapers,  a  run 
might  be  created  on  the  branches  of  the  country,  and  that  it  might 

and  for  Ireland  from  2s.  6d.  to  Is.  Ice  first  exported  to  the  East  Indies  from  the 
United  States,  18th  Maj\  Opening  of  the  China  trade  to  the  English.  East  India 
Company  charter  renewed ;  ceased  to  be  a  commercial  body.  Bank  of  England 
charter  renewed.  Usury  restrictions  removed  in  England  from  all  commercial  paper 
having  less  than  three  months  to  mature.  Mr.  Clay's  tariff  bill  passed  by  Congress. 
Removal  of  the  deposits  from  the  United  States  Bank,  September.  1834. — The 
Statistical  Society,  London,  formed.  Act  against  British  lotteries  passed  July  25  ; 
that  at  Glasgow  this  year  to  be  the  last.  Bank  of  England  notes  made  a  legal  ten- 
der for  the  first  time,  on  all  issues  above  £5,  August  Ist.  English  stamp  duties  on 
almanacs  abolished,  August  13.  Sir  Robert  Peel,  premier,  December  10th.  The 
ZoUvcrein,  a  commercial  league,  became  operative.  The  Chinese  suspend  inter- 
course with  the  English  at  Canton.  The  first  bank  in  Indiana  chartered.  London 
and  Westminster  Bank  commenced  business,  10th  March.  Resolution  of  the  United 
States  Senate  condemning  President  Jackson  for  removal  of  deposits,  March.  Nomi- 
nation of  Roger  B;  Taney,  as  Secretary  of  the  Treasury,  rejected  by  a  vote  of  28  to 
18.  Abolition  of  slavery  in  British  West  Indies,  August  1st.  Baltimore  and  Ohio 
Rail-Road  opened  for  travel  to  Harper's  Ferry,  1st  December.  Bank  of  Maryland 
failed,  24th  March.  1835. — Alex.  Baring  created  Lord  Ashburton,  April  10th. 
Duty  on  tea  reduced  to  2s.  Id.  per  lb.  French  indemnity  bill  passed,  18th  April. 
Baltimore  and  Washington  Rail-Road  opened  for  travel,  23d  August.  Bank  of 
Maryland  riots  in  Baltimore,  8th  August.  Loss  of  $20,000,000  by  fire  in  New- 
York,  16th  December.  Boston  and  Providence  Rail-Road,  Boston  and  Worcest&p 
Rail-Road,  completed. 


246  History  of  the  Bank  of  England. 

extend  even  to  the  injury  of  the  Bank  of  England."  When  it  was  said 
to  Mr.  Evans,  "  then  the  committee  are  to  understand  that  the  loss  of 
the  parcel  was  not  the  cause  of  your  going  to  the  Bank  of  England  ?" 
he  replied  unhesitatingly,  **  certainly  not." 

At  this  meeting,  Messrs.  Braidley  and  Evans  requested  the  bank  to 
advance  £100  to  £200,000,  on  bills,  promissory  notes  and  other  securi- 
ties, and,  as  an  inducement,  offered  to  close  two  of  their  largest  branches. 
During  this  interview  no  conclusion  was  arrived  at,  although  the  governor 
intimated  his  opinion  that  a  larger  amount  of  cash  would  be  necessary  to 
render  them  any  essential  service.  By  eight  o'clock  the  same  evening 
the  parcel  was  recovered;  and  if  the  loss  had  been  the  sole  reason  of  the 
application,  it  seems  reasonable  to  suppose  that  the  negotiation  would 
have  ceased. 

On  the  following  morning,  however,  it  was  renewed  by  Mr.  Braidley, 
on  the  grounds  that  the  Northern  and  Central  Bank  could  not  meet  its 
engagements  without  the  assistance  of  the  bank.  The  first  thing  they 
were  informed  was,  that  the  bank  would  make  no  advances,  unless  it  were 
an  absolute  necessity,  and  that,  as  the  help  of  the  bank  must  become 
known,  it  would  be  advisable  for  them  to  go  on  without  it,  or  proceed 
elsewhere.  The  applicants  immediately  withdrew  to  consult,  and  on 
their  return  declared  it  was  a  case  of  urgent  necessity,  and  the  following 
statement  of  the  liabilities  of  the  Northern  and  Central  Bank  was  handed 
in: 

Deposits ' £  260,000 

Circulation, 300,000 

£  560,000 
Cash  in  hand, 180,000 

Excess  of  liabilities, £  380,000 

The  assets  consisted  in  bills,  notes  and  overdrawn  accounts.  £300,000 
of  marketable  paper  could  be  immediately  given  ;  and  the  overdrawn  ac- 
counts were  stated  to  amount  to  £900,000.  On  this  statement  the  bank 
agreed  to  advance  £500,000.  £100,000  immediately,  and  £400,000  at 
a  future  period,  upon  the  condition  that  all  the  branches,  sub-branches 
and  agencies  should  be  closed,  excepting  only  Liverpool  and  London. 
The  bank  also  insisted  that  the  London  agents  should  have  no  repayment 
made  to  them  until  the  debt  of  the  Bank  of  England  should  be  liquidated. 
Mr.  Evans  considered  his  application  to  the  Bank  of  England  as  some- 
thing similar  to  going  to  a  broker  for  it,  without  being  expected  to  give 
any  statement  of  the  affairs  of  the  bank.  "  We  were  not,"  he  said,  some- 
what energetically,  "  called  upon  to  pay  off  our  deposits ;  we  were  not 
called  upon  to  pay  our  circulation  ;  they  were  both  as  high  as  they  ever 
were,  and  the  credit  of  the  bank  was  very  high  throughout  the  country." 
The  governor,  however,  took  a  very  opposite  view,  and  pointed  out  the 
decrease  in  their  deposits  to  £260,000  from  the  large  sum  of  £900,000, 
at  which  they  had  previously  stood.  It  is  both  curious  and  instructive 
to  compare  the  earnestness  with  which  they  thus  applied  for  assistance, 
and  the  greatness  of  its  necessity,  with  the  remarks  in  which  they  in- 
dulged before  a  committee  of  the  House  of  Commons,  when  their  purpose 
was  gained  and  the  danger  passed.     Thus,  Mr.  Braidley  calmly  asserted 


Discrepancy  in  Accounts.  247 

that  he  believed  it  was  only  the  anxiety  of  the  Bank  of  England  for  their 
own  credit  which  induced  them  to  grant  the  help,  as,  "  if  the  information 
of  the  lost  parcel  got  into  the  papers,  and  there  should  be  a  run  on  forty 
banks  in  diflferent  parts  of  the  country,  the  consequences  would  be  so  seri- 
ous that  the  evil  would  extend  eventually  to  the  Bank  of  England,"  and 
a  national  calamity  occasioned,  which  he  was  patriotically  desirous  to 
avert,  even  at  some  sacrifice.  Mr.  Moult  also  "knew  no  other  reason 
than  that  it  would  save  a  run  upon  themselves,  as  the  bank  had  no  love 
for  them."  It  was  added,  "  the  assistance  given  by  the  bank  was  certain 
to  injure  us.  If  it  had  been  refused,  the  directors  were  to  proceed  home 
as  rapidly  as  possible  to  close  the  bank,"  The  assertion  "that  the  Nor- 
thern and  Central  Bank  was  in  a  good  healthy  state,"  was  scarcely  com- 
patible with  "proceeding  home  as  rapidly  as  possible  to  close  the  bank." 
After  an  important  discussion,  which  lasted  from  ten  in  the  morning  until 
six  in  the  evening,  the  following  letter  was  signed,  and  arrangements  made 
for  the  receipt  of  the  money  : 

London,  29th  of  November,  1836. 

Sir, — In  consequence  of  the  urgent  necessities  of  the  Northern  and 
Central  Bank,  and  under  the  severe  pressure  they  now  experience,  we 
beg,  on  behalf  of  that  establishment,  to  apply  to  the  governor  and  com- 
pany of  the  Bank  of  England  for  an  advance  to  sustain  the  current 
engagements  of  the  Northern  and  Central  Bank.  We  are  desirous  of 
receiving  immediately  the  loan  of  £100,000  upon  the  discount  of  the 
paper  now  submitted  ;  and  we  request  the  aid  of  the  bank  for  a  further 
sum,  not  exceeding  £400,000  beyond  the  above  £100,000,  to  be  advanced 
to  us  as  may  be  found  necessary. 

We  are.  Sir, 

Your  very  obedient  servants, 

Benjamin  Braidlev,  Director. 
Thomas  Evans,  Manager. 
To  the  governor  of  the  Bank  of  England. 

One  of  the  stipulations  of  the  Bank  of  England  had  been  for  a  full  ac- 
count of  the  affairs  of  the  applicants ;  and  by  the  12th  of  December  a 
specification  was  delivered  which  materially  differed  from  the  first  state- 
ment, the  deposits  being  £860,000  instead  of  £260,000.  The  attendance 
of  some  of  the  managers  was  instantly  desired  at  the  Bank  of  England, 
and  the  discrepancy  was  attempted  to  be  explained ;  but  an  examination 
of  the  books  at  a  later  period  "  utterly  destroyed  the  excuse."  It  also 
appeared,  that  after  the  advance  of  £600,000,  a  very  large  amount  would 
be  required  to  bring  the  business  to  a  successful  issue.  The  affair  as- 
sumed so  serious  a  complexion,  that  the  governor  informed  the  repre- 
sentatives of  the  Northern  and  Central  Bank,  that  further  relief  could  only 
be  granted  on  condition  of  their  books  being  instantly  closed,  as  the  bank 
would  not  continue  assistance  while  they  made  fresh  engagements,  and 
that  in  consideration  of  this,  and  of  the  consequences  likely  to  occur  to 
the  whole  country  if  they  stopped  payment,  they  should  receive  the 
requisite  aid. 

In  both  these  arrangements  the  bank  had  stipulated  that  the  London 
agents  of  the  bank,  for  which  assistance  was  required,  should  postpone 


248  History  of  the  Bank  of  England. 

their  claims  until  those  of  the  Bank  of  England  were  fully  satisfied,  and 
a  letter  to  this  effect  was  required  before  carrying  out  the  agreement. 
To  this  the  directors  of  the  London  and  Westminster  Bank  demurred 
very  decidedly,  and  it  is  said  that  the  arrangement  nearly  fell  to  the 
ground.  The  interests  of  this  bank,  however,  were  involved  to  a  con- 
siderable extent ;  and  it  is  probable  that  their  refusal  was  rather  an  evi- 
dence of  disapprobation  than  of  positive  opposition.  However  this  may 
be,  they  found  it  advisable  to  consent  to  the  terms  proposed.  The  di- 
rectors of  the  Northern  and  Central  Bank  held  a  meeting,  at  which,  after 
entering  into  a  review  of  the  transaction,  and  declaring  "  that  the  Bank 
of  England  had  more  than  fulfilled  their  part  of  the  agreement,"  they 
were  compelled,  however  unwillingly,  to  consent  to  close  their  business. 
The  affair  was  so  important  that  two  of  the  bank  directors,  Mr.  Do- 
BREE  and  Mr.  Prescott,  accompanied  by  Mr.  J.  W.  Freshfield,  Jun., 
solicitor  to  the  bank,  immediately  proceeded  to  Manchester,  to  take  pos- 
session of  the  securities,  and  examine  the  affairs  of  the  company.  The 
investigation  was  most  satisfactory.  By  an  account  rendered  on  the  l7th 
of  December,  there  appeared  securities  to  the  amount  of  £373,136, 
while,  by  the  books,  the  almost  incredible  discovery  was  made,  that  of 
these  so-called  securities  £104,740  consisted  of  dishonored,  or,  as  they 
were  delicately  termed,  "  overdue"  bills,  and  that  very  many  were  nearly 
worthless.  Their  advances  bad  been  on  the  most  profuse  scale.  The 
directors  owed  the  enormous  sum  of  66290,000,  while,  with  a  liberality 
not  usually  awarded  to  these  functionaries,  the  clerks  were  in  debt 
nearly  £14,000.  The  proprietors  formed  a  large  proportion  of  debtors; 
and  of  fifty-two  principal  ones  at  Manchester,  thirty -five  were  share- 
holders; and  of  twenty -nine  at  Liverpool,  twenty-one  proved  to  be  the 
proportion  interested.  These  things  would  have  been  startling  to  any 
one  ;  but  to  the  directors  of  the  Bank  of  England,  accustomed  to  a  pre- 
cision little  less  than  marvellous,  they  must  have  appeared  most  extraor- 
dinary. But  this  was  not  all.  It  was  accidentally  discovered  that  secret 
accounts  were  kept ;  and  on  application  to  examine  them,  some  diflBculty 
occurred.  The  private  ledger  was  not  forthcoming ;  and  a  letter,  of 
which  the  following  is  an  extract,  was  written  by  Mr.  Freshfield,  de- 
manding, as  an  unquestionable  right,  the  possession  of  so  important  a 
document.  It  will  also  place,  in  a  clear  and  forcible  light,  some  more 
transactions  of  the  managers  of  the  Northern  and  Central  Bank  before 
the  reader:  "In  the  course  of  the  inquiries  undertaken  by  Mr.  Dobree 
and  Mr.  Prescott  into  the  assets  of  the  Northern  and  Central  Bank,  it 
appeared  that  large  debts  were  due  to  the  company  by  the  directors ; 
and  on  prosecuting  this,  it  was  found  that,  partly  in  their  own  names  and 
partly  in  the  names  of  connections  or  friends,  put  forward  avowedly  to 
represent  them,  there  were  debts  owing  by  directors  to  the  company  ex- 
ceeding the  enormous  sum  of  £200,000.  The  principal  security  for  these 
advances  consisted  of  shares  in  the  Northern  and  Central  Bank ;  and 
Mr.  Dobree  and  Mr.  Prescott,  therefore,  felt  it  their  duty  to  ascertain 
the  existence  of  these  shares  ;  first,  as  a  material  part  of  the  assets  of  the 
bank,  and,  secondly,  as  the  fact  represented  to  them,  that  the  directors 
had  agreed  to  hold  their  shares,  tended  to  show  their  own  confidence  in 
the  undertaking,  and  therefore  to  afi:brd  some  excuse  to  the  directors,  in 


Letter  of  Mr.  Freshfield — Rephj  of  Mr.  Moult.  249 

intention,  at  least,  in  the  course  they  had  pursued.  On  opening  this  in- 
quiry, however,  Mr.  Dobree  and  Mr.  Pkescott  discovered  that,  while 
some  of  the  directors  were  large  shareholders,  others  had  sold  the  greater 
portion  of  their  shares,  and  that  others  had  been  buying  and  selling  upon 
a  scale  which  appeared  too  nearly  to  approach  jobbing  in  the  shares  of 
the  company.  The  worst  feature  of  the  case  was,  that  while  the  directors 
had  bought' in  their  own  names,  and  added  by  the  credit  of  their  station 
to  the  value  of  shares  in  the  market,  sales  had  been  made  in  the  names 
of  third  parties,  and  shares  had  been  transferred  to  purchasers  in  the 
names  of  persons  who  were  for  that  purpose  merely  fictitious,  not  having 
the  shares  in  their  names ;  and  these  shares,  purporting  to  be  transferred 
by  strangers,  were  written  from  the  accounts  of  directors,  thus  falsifying 
the  transfer-book,  falsifying  the  titles  of  purchasers  and  deceiving  the 
public.  In  following  this  inquiry  it  appeared  that  1,120  shares,  placed  in 
the  names  of  the  directors,  were  carried  to  the  private  ledger,  the  same 
book  in  which  part  of  the  enormous  advance  to  the  directors  had  been 
entered  and  kept  from  view.  Mr.  Dobree  and  Mr.  Prescott,  therefore, 
required  to  see  that  book ;  and  not  only  has  that  been  refused,  but  you 
have  closed  the  investigation  into  the  share  accounts  of  the  directors.  It 
appears  to  Mr.  Dobree  and  Mr.  Prescott  that  the  existence  of  the 
shares  of  the  directors  is  most  material,  as  part  of  the  assets  of  the 
company  ;  that  the  accounts  in  the  private  ledger  are  necessary  for  the 
elucidation  of  this  and  other  matter^  of  this  inquiry,  and  they  consider 
the  withholding  them  a  breach  of  the  engagement  with  the  Bank  of 
England.  In  this  opinion  I  entirely  concur.  Upon  the  mere  verbal  con- 
struction I  am  of  opinion  that  the  inquiry  must  be  permitted,  and  that 
the  particulars  called  for  are  strictly  within  the  terras  of  the  agreement; 
but  this  transaction  cannot  be  allowed  to  stand  upon  so  narrow  a  basis. 
The  Bank  of  England  have  come  forward  upon  public  grounds  to  sup- 
port an  institution  of  such  magnitude,  that  its  failure,  otherwise  inevi- 
table, must  have  been  a  public  mischief;  and  they  were  compelled  to  do 
this  upon  such  an  emergency  as  not  to  allow  of  a  previous  investigation  ; 
but  I  insist  on  their  right  to  every  such  information  as  a  person  in  em- 
barrassments must  give  to  the  person  applied  to  for  assistance,  a  full 
statement  of  the  present  situation  and  prospects  of  the  company  ;  and 
these  can  only  be  ascertained  by  an  unrestricted  inquiry  into  the  past 
transactions  of  the  company.  And,  to  avoid  any  misunderstanding,  I 
think  it  right  to  state,  that  I  consider  the  production  of  the  private 
ledger  as  now  indispensable.  It  is  a  mere  misapprehension  of  terms  to 
treat  such  books  as  confidential.  The  private  books  of  a  trader  or  trad- 
ing company  are  private  from  clerks  ;  but  it  is  to  such  books  that  refer- 
ence must  be  made  for  the  real  state  of  the  assets  and  profits  of  the  com- 
pany ;  and  in  this  particular  case  the  book  is  now  known  to  contain  the 
accounts  of  very  large  debts  due  to  the  company,  which  it  is  necessary 
and  proper  to  investigate." 

The  following  is  an  exact  copy  of  the  reply  from  the  chairman  of  the 
Northern  and  Central  Bank  : 

*'  Mr.  Moult  has  received  your  letter,  dated  31st  December,  and  sent 
for  Mr.  Braidley  last  night,  but  found  him  confined  to  bed.     I  am  most 


250  History  of  the  Bank  of  England. 

anxious  to  have  every  circumstance  fully  set  forth  for  the  satisfaction  of 
Mr.  Prescott  and  Mr.  Dobree,  and  shall  convene  an  early  meeting  to- 
morrow, (Monday,)  to  take  into  consideration  your  communication,  and 
will  forward,  without  loss  of  time,  an  answer. 
"Broughton,  4  o'cloct,  1st  January,  1837." 

The  private  ledger  was  at  last  placed  in  the  hands  of  the  representa- 
tives of  the  Bank  of  England,  and  a  discrepancy  was  discovered  between 
the  account  tendered  on  the  iVth  of  December,  and  that  in  the  private 
ledger,  by  which  the  directors  were  indebted  £90,000  more  than  had 
heen  represented. 

Various  circumstances  were  found  out  which  prove  the  responsibility 
of  a  company,  unless  great  care  be  taken  to  choose  a  direction  well  dis- 
ciplined to  their  task.  One  director  alone  owed  £70,000.  In  two 
months  the  board  of  managers  had  distributed  among  themselves  4,465 
shares,  at  £1  premium,  when  they  were  selling  in  the  market  at  £3  pre- 
mium. Besides  these,  £3,465  were  divided  at  a  lower  rate,  also  for  their 
own  benefit.  "  Some  may  be  more  deeply  implicated,"  says  the  confi- 
dential report  to  the  House  of  Commons,  "  but  justice  requires  that  the 
case  of  Mr.  Stell  should  be  specially  noticed.  That  gentleman  had  a 
large  banking  account  with  the  company,  and  the  directors  invited  him, 
at  the  latter  end  of  the  year  1835,  to  take  a  seat  in  the  direction,  to  which 
he^assented.  Mr.  Stell  was  already  a  proprietor  of  1,400  shares,  for 
which  he  had  paid,  but  the  directors  proposed  to  give  him  an  additional 
thousand  shares  at  the  premium  of  £3  per  share,  and  consented,  on  his 
paying  the  premium,  to  allow  the  £10,000  to  remain  at  his  debit  for  two 
years  certain,  and  a  third  year,  if  he  required  it,  charging  interest  thereon 
at  the  rate  of  £4  per  cent,  per  annum.  Mr.  Stell,  in  fact,  paid  £3,000 
for  premium  ;  and  these  shares  were  allotted  to  him  on  the  day,  and  no 
doubt  at  the  same  board,  when  the  directors  apportioned  to  themselves 
1,000  shares,  at  £l  per  share  premiums."  A  further  instance  was  that 
of  Mr.  John  Ferneley,  of  Manchester,  who  declined  receiving  an  ap- 
propriation of  shares,  although  they  were  selling  at  £5  and  £6  premium 
in  the  market ;  and  when  it  was  pressed  upon  him,  he,  to  avoid  a  collision, 
sold  them,  and  sent  the  proceeds  to  the  chairman  of  the  bank. 

Another  circumstance  was  brought  to  light,  evincing  the  necessity  of 
care  in  accepting  dividends,  unless  it  can  be  clearly  proved  that  they 
arise  from  the  legitimate  profits  of  the  company.  For  the  year  ending 
December,  1835,  an  interest  of  seven  per  cent,  was  declared.  The  ac- 
tual business  profits  of  the  company  being  insufficient  to  sanction  this 
division,  the  directors  provided  for  the  deficiency  by  assuming  a  profit  on 
unsold  shares.  The  company  was  originally  to  consist  of  100,000 
shares;  of  these,  29,104  remained  unappropriated,  and  the  expedient, 
which  certainly  merits  praise  for  its  ingenuity,  was  resorted  to,  of  im- 
agining them  to  be  sold  at  £l  premium,  thus  producing  a  fictitious  sum 
of  £29,104,  to  assist  in  paying  the  dividend  of  seven  per  cent.  These 
circumstances,  combined,  induced  Mr.  Dobree  and  Mr.  Prescott  to  re- 
quest that  a  committee  of  inspection,  unconnected  with  the  recent  ad- 
ministration of  the  company,  should  be  associated  for  the  investigation  of 
the  affairs  of  the  bank. 


Legal  Decision.  251 

So  liberally,  however,  had  the  shareholders  been  used,  that  a  doubt  was 
expressed  whether  it  would  be  possible  to  find  four  of  them  who  were 
not  indebted  to  the  company.  The  difficulty  was  overcome,  and  the 
Bank  of  England  having  secured  its  interests  by  entering  judgment  for 
one  million,  which  would  enable  them,  in  the  event  of  necessity,  to  come 
upon  the  proprietors  of  the  Northern  and  Central  Bank,  left  the  imme- 
diate management  of  the  affairs  to  this  newly-formed  committee.  At  the 
meeting  which  took  place  on  this  ocasion,  Mr.  Freshfield  explained  the 
accounts  as  he  had  found  them  ;  Mr.  Moult  remarked,  it  was  "  an  ex- 
ceedingly fair  statement."  Mr.  Braidley  also  added,  "  the  statement  is 
a  fair  one  ;"  and  both  these  gentlemen  expressed  their  obligations  to  the 
directors  of  the  Bank  of  England  for  the  pains  they  had  taken ;  Mr. 
Moult  adding,  he  was  surprised  at  the  temper  and  forbearance  they  had 
manifested  throughout  the  investigation. 

Among  the  joint-stock  banks  which  had  been  established  through  the 
declaratory  clause,  in  the  act  of  1833,  the  London  and  Westminster 
occupied  a  conspicuous  place  ;  and  on  the  5th  ofApril,  1837,  an  import- 
ant opinion  was  given  by  Lord  Langdale,  in  the  Rolls'  court.  The 
question  which  was  bft  for  his  lordship  to  decide,  was  the  right  of  this 
establishment  legally  to  accept  bills  of  exchange,  payable  at  a  less  date 
than  six  months.  It  appeared  that  the  St.  Alban's  bank  had  drawn  a 
bill  on  the  London  and  Westminster  for  £25,  at  twenty-one  days  date, 
which  bill  was  duly  accepted  by  order  of  the  directors  of  the  latter.  The 
Bank  of  England  considered  that  the  acceptance  of  a  bill  of  less  date 
than  six  months,  by  any  banking  establishment  containing  more  than  six 
partners,  and  within  sixty-five  miles  of  London,  was  a  violation  of  the 
principles  of  their  charter.  Lord  Langdale  was  of  the  same  opinion, 
and  decreed  that  an  injunction  should  be  issued  restraining  the  London 
and  Westminster  Bank  from  accepting  at  a  less  date  than  six  months. 

The  commercial  discredit  at  the  end  of  1836  and  beginning  of  1837,* 


*Ia  France  the  public  funds  had  rapidly  risen  in  1836;  the  three  per  cents, 
which  had  been  76  in  January,  were  at  80  in  December,  Bank  of  France  shares 
had  risen  from  1,755  to  2,145  in  the  course  of  the  year.  The  revenue  for  1836,  for 
the  first  time  since  1830,  was  superior  to  the  expenditure,  the  former  beino- 
},000,700,000francs,  (£40,028,000,)  the  latter,  999,467,000 francs,  (£39,960,000,)leaT- 
ing  a  small  balance  at  the  credit  of  the  exchequer.  The  imports  and  exports,  which 
had  been  very  depressed  in  1833  and  1834,  became  much  more  abundant  in  1835  and 
1836  ;  and  speculation  outstripping  the  progress  of  real  profit,  opened  to  the  ardent 
imaginations  of  the  people  the  prospects  of  future  and  unbounded  gain,  whicli  soon, 
like  a  fever,  seized  upon  and  carried  away  all  classes. — Alison's  Eurom,  vol.  7,  p. 
201.  /-  '  '  1 

^  Numerous  French  societies  were  established  on  the  principle  of  commandite,  or 
limitation  of  the  liabilities  of  partners  to  the  stock  subscribed,  which,  as  it  lessened 
the  risk  of  such  undertakings,  increased  the  favor  with  which  they  were  regarded 
by  small  capitalists,  and  the  avidity  with  which,  as  a  matter  of  speculation,  the 
shares  were  sought  after  by  the  public.  In  the  two  months  of  January  and  Feb- 
ruary, 1838,  no  less  than  sixty-seven  societies  of  this  description  were  setup,  with  the 
legal  formalities,  in  France,  with  a  subscribed  capital  of  108,222,000  francs, 
(£4,730,000,)  divided  into  219,212  shares  ;  and  in  March,  the  fever  of  speculation  had 
increased  to  such  a  degree  that  companies,  with  a  capital  of  274,572,000  francs, 
(£11.000,000,)  were  established  in  addition,  divided  into  399,636  shares.— Alison's 
Uurope,  vol.  7,  p.  227. 


252  History  of  the  Bank  of  England. 

arising  from  the  panic  which  followed  the  excitement  of  the  former  year, 
was  productive  of  renewed  assistance  on  the  part  of  the  Bank  of  England. 
Some  private  banking  houses  claimed  and  received  gold  to  a  large  amount, 
on  the  representation  that  if  aid  should  not  be  afforded,  the  most  disas- 
trous consequences  must  ensue.  One  banking-house,  that  of  Esdaile  & 
Co.,  stopped  payment.  Great  anxiety  was  evinced  throughout  the  city. 
Fears  were  entertained  lest  a  run  should  commence  on  others.  It  was 
agreed,  therefore,  that  each  of  the  London  bankers  should  pay  £5,000, 
in  order  to  prevent  a  catastrophe  which  might  have  become  generally 
ruinous.  By  this  policy  the  city  was  preserved  from  distrust,  and  the 
creditors  of  Messrs.  Esdaile  received  all  their  demands  in  full. 

From  the  beginning  of  1837  doubts  had  been  entertained  that  "the 
resources  of  the  principal  houses  in  the  American  trade,  vast  as  those 
resources  were  known  to  be,  would  not  be  sufficiently  adequate  to  meet 
the  enormous  extent  of  their  engagements."  In  February  and  March 
their  difficulties  had  excited  great  attention  ;  and  it  became  doubtful  to 
what  extent  their  necessities  would  require  assistance,  and,  unlil  this 
doubt  was  expelled,  great  concern  was  felt  in  all  monetary  circles.  The 
bullion  left  the  bank  coffers ;  and  by  the  Vth  of  February  it  had  fallen  to 
£4,032,000.  In  this  month  the  emergencies  of  the  great  American 
houses  were  notorious;  and  it  afterwards  became  known  that  they  had 
applied  for  and  received  assistance  from  the  Bank  of  England.  It  was 
soon  ascertained  that  a  sufficient  amount  had  not  been  granted  to  save 
them  from  falling;  and  in  May,  1837,  they  again  applied  for  help.  On 
an  investigation  of  the  offered  securities  they  were  found  inadequate  ; 
and,  after  a  long  and  anxious  deliberation,  the  directors  came  to  the 
conclusion  of  refusing  the  request.  The  ramifications  of  these  houses 
were  so  extensive,  that  it  was  evident  great  mischief  must  ensue  from 
their  destruction.  On  the  1st  of  June,  1837,  the  day  on  which  the  ap- 
peal was  finally  rejected,  three  great  American  firms  announced  a  suspen- 
sion of  payments.  For  a  week  there  was  great  distress,  if  not  an  absolute 
panic,  as  the  houses  alluded  to  were  under  acceptances,  at  the  time  of 
their  failure,  to  more  than  five  millions.  By  the  absence,  however,  of 
much  doubtful  paper,  the  circulation  became  sounder ;  and,  assisted  by 
advances  from  the  bank,  to  the  amount  of  £6,000,000,  the  trade  of  the 
country  revived.  The  years  1838  and  1839  witnessed  a  repetition  of 
similar  scenes.  In  nine  months  3,300,000  quarters  of  grain  were  entered 
for  home  consumption.  The  large  payments  for  foreign  corn  had  de- 
pressed the  exchanges,  and  the  country  was  embarrassed  still  further  by 
its  financial  relations  with  the  United  States.  American  securities  had 
been  over-imported,  and  there  was  a  continued  drain  upon  the  bullion  of 
the  Bank  of  England,  which  was  reduced  from  £7,073,000  in  April, 
1839,  to  £2,522,000,  at  which  it  stood  in  the  following  October.  On 
the  IGth  of  May  an  effort  was  made  to  stop  this  progressive  drain  by  rais- 
ing the  discount  to  five  per  cent.  On  the  20th  of  June  it  was  again 
increased  to  five  and  a  half,  with  the  further  announcement  that  money 
would  only  be  advanced  on  bills  of  exchange.  Still  the  drain  went  on  ; 
and  on  the  13th  of  July  a  notice  was  issued  that  the  bank  would  receive 
proposals  for  the  purchase  of  the  dead  weight,  either  in  money  or  in  stock. 
The  attempt  failed,  as  the  price  offered  did  not  reach  its  estimated  value. 


Transaction  with  the  Bank  of  France.  253 

"They  then,"  said  Mr.  Norman,  "pledged  a  portion,  and  obtained 
credits  in  foreign  countries  upon  it ;  whicli  they  made  use  of  to  the 
amount  of  about  two  millions  and  a  half.  They  also  borrowed  £750,000 
in  exchequer  bills  from  the  East  India  Company,  on  the  same  security,  a 
portion  of  which  they  made  use  of."  The  drain  for  bullion  ceased  about 
October.  "  I  have  no  doubt,"  says  the  same  authority,  and  it  must  be 
received  with  the  respect  due  to  a  thorough  comprehension  of  the  sub- 
ject, "  that  the  foreign  credit  operated  materially  ;  it  tended  to  restrict 
the  circulation  here,  and  it  also  furnished  means  of  foreign  payment." 

The  operation  to  which  allusion  is  made,  of  "  credits  in  foreign  coun- 
tries," was  not  unprecedented  in  the  history*  of  the  bank,  having  previ- 
ously been  resorted  to  in  1832  to  1836.  An  idea  generally  prevailed 
that  the  English  corporation  had  been  compelled  to  borrow  bullion  from 
its  less  opulent  neighbor,  but  this  was  a  misconception.  The  following, 
from  "  The  Times"  is  a  correct  account : 

"In  Jul}',  1839,f  the  bullion  in  the  Bank  of  England  had  fallen  below 
three  millions  sterling,  while  its  rate  of  discount  was  as  high  as  5^  per 
cent.  It  was  evident  that  the  causes  for  the  existing  drain  consisted 
more  in  distrust  abroad,  founded  on  the  belief  that  the  J3ank  of  England 
could  not  long  continue  specie  payments,  than  in  an  unfavorable  balance 
of  trade,  or  a  run  for  sovereigns  to  hoard  at  home.  Parties  on  the  con- 
tinent drew  out  all  their  balances  here,  and  as  much  more  as  their  cor- 
respondents would  give  them  credit  for,  discounted  the  acceptances  in 
London,  and,  in  the  absence  of  foreign  bills,  took  gold  from  the  Bank  of 
England.     Under  these  circumstances  it  was  impossible  that  exports  of 


*  As  Bank  of  England  notes  were  now  declared  a  legal  tender  every  where  except 
at  the  Bank  of  England,  they  were,  to  all  practical  purposes,  an  mconvertible  paper 
currency,  except  in  those  periods  when  bad  harvests,  foreign  wars,  or  any  other 
cause,  induced  a  great  drain  upon  the  metallic  resources  of  the  country,  and  brought 
the  notes  back  in  multitudes  to  be  exchanged  for  gold  at  the  parent  establishment. 
At  this  time,  however,  not  only  was  there  no  such  drain,  but  the  very  reverse  wae 
the  case.  So  firm  had  tlie  seasons  been,  and  so  great  the  progress  of  agriculture 
under  the  protective  system,  that  the  import  of  wheat  had  sunk  almost  to  nothing; 
on  an  average  of  five  years  ending  1830,  it  was  only  380,000  quarters,  and  in  the 
two  last  years  of  the  period  it  was  under  30,000  quarters.  Thus  the  gold  was  kept 
in  abundance  in  the  country,  and  the  paper  was  still  more  so  ;  for,  in  consequence 
of  the  practical  inconvertibility  of  Bank  of  England  notes  during  prosperity,  the 
paper  in  circulation,  including  that  of  country  banks,  had  risen  since  1831  nearly 
three  millions.  No  combination  of  circumstances  could  have  been  figured  more 
likely  to  induce  present  prosperity,  or  one  more  certain  to  be  durable,  if  the  cur- 
rency had  been  established  on  a  proper  foundation.  Unhappily,  based  as  it  was 
upon  the  retention  of  gold,  which,  in  the  nature  of  things,  could  not  be  permanently 
retained,  it  stood  upon  a  sandy  foundation,  and  upon  that  gold  being  withdrawn 
numberless  calamities  ensued. — Alison's  Europe,  vol.  7,  p.  145. 

■j-  It  was  the  incessant  fall  in  the  price  of  commodities  of  every  sort,  which  had 
now  gone  on,  with  only  two  periods  of  intermission,  of  two  years  each,  for  twenty 
years,  which  was  the  cause  of  this  universal  and  unheard  of  distress.  With  tlie  ex- 
ception of  the  years  18'i4  and  1825.  when  the  small-note  bill  temporarily  suspended 
the  decline,  and  the  years  1834  and  1835,  when  the  joint-stock  bank  bill  and  the  bill 
making  Bank  of  England  notes  a  legal  tender,  save  at  the  Bank  of  England,  pro- 
duced the  same  effect,  the  whole  period  from  1819  to  1839  had  been  one  of  incessant 
faU  of  prices.  The  chief  articles  of  commerce  had  declined  in  money  value,  during 
that  time,  50  per  cent. ;  many  much  more. — Alison's  Europe,  vol  7,  p.  321. 

17 


254  Hislo7-y  of  the  Bank  of  England. 

produce  and  manufactures  from  England  could  take  place  immediately  to 
a  sufficient  extent  to  counteract  the  evil ;  but  it  was  seen  that  the  diffi- 
culty would  be  met,  if  a  temporary  creation  of  bills  on  the  continent 
could  be  effected.  With,  this  view,  the  Bank  of  England  engaged  to 
transfer  English  securities,  as  a  guarantee,  to  Messrs.  Baring  Brothers  *t 
Co.,  or  those  whom  they  should  name,  and  this  house  engaged  to  draw 
three  months'  bills  for  forty  millions  of  francs  on  various  houses  in 
Paris.  These  bills,  which  Baring  Brothers  &  Co.  negotiated  on 
'change,  paying  the  proceeds  into  the  bank,  so  as  gradually  to  act  upon 
the  circulation,  fully  supplied  the  trade  demand  for  remittances  hence, 
and  equally  served  to  meet  all  paper  in  England  remitted  here  for 
returns,  as  they  proved  a  better  return  than  gold.  At  the  end  of  three 
months,  when  the  acceptances  fell  due,  the  same  amount  was  re-drawn, 
so  as  to  cover  each  acceptor  by  bills  on  his  neighbor,  thus  prolonging  the 
operation  to  six  months ;  but,  before  the  expiration  of  this  period,  the 
supply  of  the  regular  remittances  of  commerce  had  been  such  as  to  ena- 
ble Messrs.  Baring  to  liquidate  all  the  engagements  in  Paris,  and  to 
restore  the  pledged  securities  to  the  Bank  of  England. 

"  From  this  statement  the  Bank  of  France  will  appear  to  have  had 
nothing  to  do  with  the  operation  ;  but  a  mode  by  which  they  facilitated 
its  progress,  and  which  doubtless  gave  rise  to  the  erroneous  suppositions 
which  have  since  been  entertained  on  the  subject,  remains  to  be  men- 
tioned. The  drafts  drawn  by  Baring  on  the  various  French  houses  were, 
of  course,  liable  to  be  presented  for  discount  to  the  Bank  of  France ;  and 
as  these  firms  respectively  had  credit  only  to  a  certain  limit  with  that 
institution,  there  was  a  possibility  that  their  rejection  might  become 
necessary,  owing  to  such  limits  being  exceeded.  This  difficulty  was  cal- 
culated to  produce  an  injurious  effect;  and  application  was  therefore 
made  to  the  Bank  of  France,  in  order  that  it  might  be  overcome.  An 
understanding  was  accordingly  entered  into  by  the  Bank  of  France,  that 
the  drafts,  in  case  they  should  make  their  appearance,  should  be  dis- 
counted, without  regard  to  the  limits  in  question.  This  precautionary 
arrangement,  however,  proved  to  have  been  scarcely  essential ;  for,  the 
drafts  being  of  the  first  character,  and  the  rate  of  discount  at  the  Bank  of 
France  being  somewhat  higher  than  the  market  rate,  they  were  readily 
discounted  out  of  doors;  and  hence  it  is  believed  that  but  a  very  small 
proportion  found  their  way  into  that  establishment." 

The  lowest  sum  to  which  the  bullion  was  reduced  was  £2,300,000 ; 
but  from  this  amount  the  reaction  took  place,  and  the  monetary  affairs  of 
the  bank  were  restored  to  their  ordinary  footing ;  and  when,  in  1839, 
the  Bank  of  the  United  States  of  America  applied  for  that  assistance 
which  was  required  through  pressure  and  difficulty,  they  were  enabled  to 
offer  £300,000,  Avhich,  however,  being  deemed  insufficient,  was  rejected 
by  the  latter. 

Mr.  Palmer  attributed  the  drain  of  bullion  to  three  causes :  "  The 
first  I  take  to  have  been  the  very  large  amount  of  American  securities 
that  was  sold,  or  for  which  credit  had  been  given  in  1838,  and  to  Febru- 
ary, 1839,  Avhich  increased  considerably  the  amount  of  bills  upon  Lon- 
don, in  the  continental  markets ;  the  second  cause  I  attribute  to  the  un- 
precedented extent  of  the  purchase  of  foreign  corn,  in   almost  every 


Manifolding  Notes. 


255 


continental  port,  towards  the  close  of  1838,  and  almost  through  the 
whole  of  1839;*  and  the  third  cause,  from  the  doubt  existing  on  the 
continent,  after  May  and  June,  1839,  of  the  ability  of  the  bank  to  main- 
tain specie  payment,  the  consequence  of  such  apprehension  having  been 
the  transmission  of  all  long-dated  bills  upon  this  country  for  immediate 
discount,  and  return  of  their  values,  and  the  withdrawal  of  moneys,  to  a 
considerable  amount,  deposited  in  this  country  for  foreign  account." 

The  difficulties  environing  the  marketf  of  America  affected  the  bank, 
which  had  claims  on  the  United  States  to  a  considerable  amount.  Bills 
drawn  on  firms  there  had  been  discounted  by  the  bank  for  the  houses  in 
England :  and,  on  the  inability  of  the  latter  to  meet  them,  the  bank  fell 
back  upon  the  American  firms.  Representations  were  made  by  well-in- 
formed persons  that  an  exportation  of  gold  to  the  United  States  would 
hasten  the  restoration  of  credit ;  that  great  benefits  would  arise,  and  that 
the  ordinary  commercial  intercourse  between  the  two  countries  would  be 
restored.  To  these  representations  the  bank  yielded ;  and  at  the  com- 
mencement of  1838  the  directors  forwarded  one  million  sovereigns  to 


*  The  extreme  sales  of  bank  shares  during  the  years  1835-1840  were  as  follow, 
together  with  the  bank  dividend,  the  circulation  and  bullion  in  March  of  each  year, 
and  the  lowest  and  highest  prices  of  Consols : 


Consols. 

Low- 
est. 

Uigh- 
est. 

Lowest. 

Highest. 

Dividend. 

Circulation. 

Bullion. 

1835,  . 

...   208 

225 

..      8      .. 

£18,510,000 

£6.289,000      . 

.     89J 

92^ 

1836,  . 

...    199 

219 

..      8      .. 

18,195.000 

7,918,000      . 

.     86f 

92^ 

1837,  . 

...   203 

212 

..      8      .. 

18,165,000 

4,077,000      . 

.     871 

93^ 

1838,. 

...  201 

208 

..      8      .. 

18,975,000 

10,471,000      . 

.     90f 

95ir 

1839,  . 

...   177 

206 

..      7      .. 

18,098,000 

6,773,000     . 

.     89J 

93| 

1840, . 

. ..   156 

179 

..      7      .. 

16,504,000 

4,311,000     . 

.     85| 

93i 

f  The  contraction  of  the  currency  in  England  led  to  a  disturbance  of  the  exchanges 
with  the  United  States.  Soon  after  the  suspension  of  the  New- York  banks  in  May, 
1837,  exchange  on  London  was  sold  at  20  @  25  per  cent,  premium.  The  following 
were  the  changes  from  July,  1837,  to  February,  1838;  the  banks  having,  in  the 
mean  time,  agreed  to  resume  specie  payments  on  the  1st  May  following,  The  real 
par  of  exchange  being  109J  @  109f : 

Bills  on                                  July,  mi.  iV^op.,  1837.  Z)ee.,  1S3T.         ii^eJ.,  1838. 

London,  60  days' sight, 18@    21  15  @    15^  10i@lli          6^@      7 

France,        "             "     4.80@4.90  4.95  @4.97i  5.25  @  —  5.37i@5.40 

Holland,      "   per  guilder, 44@    45  42  @    42^  40|@  —        39  @    39^ 

Hamburgh,"     "   marc  banco,    38@    39  37^®    37|-  36|@36J        35  @    — 

Bremen,      "     "    rix  dollar,..    84@    85  83  @    84  81  @81j        79  @    — 

The  derangement  of  domestic  exchanges  in  the  United  States,  during  the  year 
1837,  is  indicated  by  the  following  summary  for  bills  drawn  in  New- York: 


Domestic  bills. 


July,  1S3T. 


^Vo».,  1837 


Dec,  1S37. 


Boston, 


Philadelphia, 

Baltimore, 

Richmond, 

North  Carolina, 

Charleston, 

Savannah, 

New-Orleans, 


at  sight, par  @  1  dis. 


i@l 

i@l 

1    @  U 

4    @  5 
4    @  5    ' 
11    @12 


n 
n 

2 
24-1 

3i 


If  dis. 


If  @ 
l+@ 
If  @ 
2    (cb 


2  @  2i 
2ir@2f 
2     rffi3 


2|r  dis, 


Feb.. 

.  H@ 

2     @ 

2  @ 
24  @ 
—  @ 

3  @ 
3  @ 
3i@ 


1838. 

2  dis. 
21" 
2i" 

3  " 
5  " 
34- " 
3i" 
4^" 


256  History  of  the  Bank  of  England. 

America.  The  importance  of  their  transactions  with  this  country  may 
be  gathered  from  the  fact,  that  two  gentlemen  were  confidentially  em- 
ployed by  them  to  visit  America,  on  the  important  question  of  represent- 
ing their  interests,  and  assisting  them  in  procuring  an  adjustment  of 
their  accounts. 

The  use  of  bank  notes,  independently  of  their  legitimate  value,  appears 
to  be  incalculable.  It  has  been  seen  that  they  may  be  pasted  on  a  vil- 
lasce  casement,  in  company  with  a  ballad,  to  keep  out  the  wind ;  and  that 
an  Algerine  slave  may  make  them  the  medium  of  communication  with 
his  friends  in  the  north.  But  the  most  extraordinary  power  to  Avhich 
they  have  been  placed  is  to  be  found  in  what  our  authority  calls  "  mani- 
folding." A  person  carrying  on  a  somewhat  extensive  business  in  the 
provinces,  being  in  want  of  cash,  and  in  possession  of  a  £50  note,  came 
to  the  resolution  of  cutting  it  in  two.  With  one  part  he  went  to  a  mon- 
eyed acquaintance,  told  him  he  had  just  received  it  by  post,  and  that  the 
other  would  follow  in  a  day  or  two,  and  it  would  be  a  great  convenience 
if  his  friend  could  advance  him  cash  to  the  amount  on  its  security.  The 
person  to  whom  he  applied  consented  to  the  request.  Having  been  thus 
successful  with  onedialf,  he  determined  to  try  the  other ;  with  it  he 
proved  equally  fortunate,  and  thus  his  £50  note  procured  him  £100. 
The  game  was  too  profitable  to  be  given  up  at  once  ;  so  he  went  to  a 
banker,  and  demanded  a  £100  note  with  the  cash  he  had  received. 
Again  he  had  recourse  to  the  process  of  cutting;  again  he  victimized 
two  acquaintances,  and  thus  procured  £200  for  his  £50.  With  the  mon- 
ey thus  acquired  he  departed,  satisfied  with  having  gained  £150  thus 
easily. 

In  1836,  in  consequence  of  the  failure  of  several  East  India  houses, 
and  the  discredit  which  was  generally  felt,  a  resolution  was  passed  au- 
thorizing the  issue  of  bills  of  the  Bank  of  England,  payable  at  sixty  days' 
sight.* 

*  The  public  funds  of  Great  Britain  have  undergone  some  fearful  vicissitudes.  In 
1700,  on  the  death  of  the  King  of  Spain,  they  fell  to  50  per  cent.  After  the  peace 
lof  Utrecht,  in  1715,  they  rapidly  rose,  and  between  1730  and  the  rebellion  in  1745, 
vwere  never  below  89  ;  but  during  the  rebellion  sank  to  75.  They  fell  to  63  in  1782, 
at  the  close  of  the  American  war;  and,  moxmting  afterwards  to  97^,  in  1792,  fell,  in 
1798,  to  47^.  This  was  the  lowest  they  ever  reached.  Between  that  and  the  high- 
est point,  107,  attained  in  the  year  1737,  the  difference  was  equivalent  to  127  per 
cent,  above  the  minimum  price,  sufficient  to  annihilate  many  fortunes ;  or  to  confer 
great  wealth  on  those  who  purchased  when  the  funds  were  at  the  lowest.  From 
.1755  to  1844,  a  period  of  nearly  ninety  years,  consols  were  always  below  par. 

In  the  eighteenth  century,  consols  were  frequently,  and  for  long  periods,  at  or 
above  par,  viz. : 


Tear. 

Highest 

Price. 

Loweei  Price. 

Tear. 

Jlighest  Price. 

Lmcest  Price, 

.1732,.. 

. .  .101  per 

cent. 

96  per  cent. 

1743,. 

103 

per 

cent. 

100  per 

:ent. 

1733,.. 

...103 

92 

1749,. 

102 

91 

1736,.. 

...103 

100 

1750,. 

101 

98 

1737... 

...107 

105 

1751,. 

103 

97 

1738,.. 

...106 

102 

1752,. 

106 

101 

1739,.. 

...105 

97 

1753,. 

106 

104 

1740,.. 

...101 

98 

1754,. 

...    104 

102 

1741,.. 

...101 

98 

1755,. 

101 

90 

.1742,.. 

. . .102 

98         " 

Exchequer  Bill  Forgeries.  257 


CHAPTER    XXIII. 

EXOHEQUEB    BILL    FORGERIES    BY    EDWARD     BEAUMONT    SMITH NEW    DISCOVERY LEGAL 

DECISION INTERNAL     ALTERATION      IN      THE     CIRCULATION    AND     NATIONAL     DEBT    DE- 
PARTMENT  GREAT     CONTINENTAL     CONSPIRACY    BY    M.     DE     BOURBEL,     1839-1840 

ITS   DEVELOPMENT    AND    DISCOVERY FATE    OF    THE    PERPETRATORS TRIBUTE    TO    "  THE 

TIMES." 

In  the  month  of  October,  1841,*  the  members  of  the  stock  exchange 
were  startled  with  the  rumor  of  a  series  of  forgeries,  the  ramifications  of 
which  were  said  to  be  so  wide  that  no  person  could  tell  to  what  extent 
they  had  penetrated.     It  was  stated  that  a  large  proportion  of  the  ex- 

*  The  period  from  1836  to  the  beginning  of  1841  was  pregnant  with  important 
financial  and  commercial  events  in  both  Europe  and  the  United  States,  including 
the  momentous  revulsion  of  1837  in  the  United  States,  and  the  distress  in  England. 
The  following  were  the  leading  events  of  the  period : 

1836.— Death  of  N.  M.  Rothschild,  at  Frankfort,  July  28.  Charter  of  United 
States  Bank  expired,  March  4,  and  succeeded  by  Pennsylvania  United  States  Bank. 
Reduction  of  the  newspaper  stamp  duty  in  England,  15th  September.  Failure  of 
the  Commercial  and  Agricultural  Bank  of  Ireland.  Anthracite  coal  used  for  steam- 
boats on  North  River.  Independence  of  South  American  republics  acknowledged 
by  Spain,  4th  December.  1837. — Panic  in  the  London  market,  June.  Failures 
of  American  bankers  in  London.  Further  modifications  of  the  usury  laws  of 
England.  Failure  of  banks  in  the  city  of  New- York,  May  10.  Grand  Junction 
Railway,  England,  opened  4th  July.  Revolt  in  Canada.  Mont  de  Piete,  Limerick, 
established.  1838. — Railway  partially  opened  from  London  to  Southampton,  May. 
London  and  Birmingham  Railway  opened,  September  17.  Arrival  of  the  steamers 
Great  Western  and  Sirius  at  New-York,  from  England.  Reduction  of  taxes  on 
paper  and  newspaper  stamps  and  assessed  taxes.  International  copyright  act  in 
England,  July  31.  Wreck  of  the  Forfarshire ;  heroism  of  Grace  Darling,  5th 
September.  Royal  Exchange,  London,  burned,  10th  January.  Resumption  of 
specie  payments  in  New-York,  May.  Sub-Treasury  bill  defeated  in  Congress,  June. 
United  States  Exploring  Expedition,  under  Captain  Wilkes,  left  Hampton  Roads, 
19th  August.  Imprisonment  for  debt  abolished  in  England.  1839. — British  treaty 
of  commerce  with  the  United  States,  January  19.  Eastern  Railway  opened  to 
Rumford,  June  18.  Penny  postage  act  passed,  August  17.  Slave  trade  suppres- 
sion act  passed  in  England,  August  24.  British  trade  with  China  stopped,  Decem- 
ber. Second  suspension  by  the  banks  at  Philadelphia,  9th  Sei^tember,  followed  by 
bank  failures  in  the  South  and  West.  Western  Rail-Road,  Worcester  to  Springfield, 
opened,  1st  October.  Union  Bank,  London,  commenced  business.  1840. — Penny 
postage  adopted  in  England.  Postage-stamps  and  stamped  envelopes  come  into 
use,  May.  London  and  Blackwall  Railway  opened,  July  4.  The  opium  war  in 
China.  The  Chinese  fort  at  Amoy  destroyed  by  the  English,  July  3.  Island  of 
Chusan  seized,  July  5th.  Blockade  of  the  Chinese  coasts,  July  10.  Antarctic  con- 
tinent discovered  by  Wilkes,  19th  January.  First  steam  vessel  at  Boston  arrived 
from  England,  3d  June.  First  Cunard  steamer  (the  Britannia)  arrived  at  Boston, 
18th  July,  and  the  Acadia,  I7tn  August.  Fiscal  bank  bill  vetoed  by  President 
Tyler,  ItSth  August.  Bankrupt  law  passed  by  Congress,  18th  August.  Bill  for 
distribution  of  public  lands  passed  by  Congress,  23d  August.  Fiscal  corporation 
bill  vetoed  by  President  Tyler,  9th  September.  Loan  of  $12,000,000  authorized 
by  Congress. 


258  History  of  the  Bank  of  England. 

chequer  bills,  then  in  the  market,  were  forged.  Great  alarm  spread 
througliout  the  holders  of  these  securities.  No  one  knew  how  far  he 
might  be  involved,  and  there  was  no  mode  of  testing  their  authenticity. 
The  report  continued  to  increase  ;  and  the  public  were  made  aware  of  a 
fraud  so  great  that  it  jeopardized  the  prosperity  of  many  first-rate  houses, 
and  so  dishonorable  that  it  is  difficult  to  find  an  excuse  for  one  who  had 
possessed  the  confidence  of  liis  superiors  for  twenty-eight  years,  and 
who,  by  his  nefarious  transactions,  disgraced  alike  himself  and  his  con- 
nections. The  Bank  of  England  were  deeply  interested  in  the  question, 
as  exchequer  bills  formed  a  deposit  on  which  they  frequently  advanced 
money.  The  species  of  bill  chosen  was  the  supply  bill,  issued  under  the 
authority  of  various  acts  of  Parliament,  and  either  paid  off  or  exchanged, 
according  to  the  option  of  the  holder,  after  the  expiration  of  a  year. 
They  pass  with  as  much  facility  as  a  bank  note,  and  are,  from  many  cir- 
cumstances, a  favorite  investment.  In  1841,  Mr.  David  IIaes,  a  mem- 
ber of  the  stock  exchange,  was  requested  to  lend  money  on  exchequer 
bills ;  but  the  interest  offered  of  six  per  cent,  seemed  so  strange  to  this 
gentleman,  who  had  lent  £2t),000  at  four  per  cent.,  that  his  suspicions 
were  aroused,  and  he  immediately  entered  into  a  communication  with  the 
chancellor  of  the  ^exchequer.  To  those  who  are  uninitiated  in  the  mode  of 
transacting  business  at  the  stock  exchange,  the  following  evidence  of  Mr. 
Haes  will  prove  both  novel  and  interesting :  "  I  had  been,"  said  this  gentle- 
man, "  in  the  habit  of  lending  money  on  foreign  stock,  but  thought  it 
imprudent  to  continue  ;  and  that  I  would  take  it  out  of  the  foreign  mar- 
ket and  lend  it  on  English  security.  I  lent  £20,000  on  exchequer  bills 
at  four  per  cent.  I  was  walking  up  Broad-street  about  ten  or  eleven 
o'clock,  on  Tuesday  morning,  with  a  friend,  when  a  person  crossed  over 
the  way  to  me,  and  said,  'You  are  the  man  I  want;  will  you  lend  me 
some  money  on  exchequer  bills  V  I  said,  '  Yes,  I  will ;  it  depends  upon 
the  amount,  the  interest  and  the  time.'  He  says,  '  The  interest  is  six 
per  cent,  for  three  months  ;  you  may  have  £10,000  worth.'  I  thought 
that  very  good  interest  certainly.  But  he  parted  with  a  man  on  the  op- 
posite side  of  the  way.  I,  at  that  time,  did  not  consider  him  a  man 
likely  to  have  the  bills  in  any  way  at  all.  He  said,  '  You  can  have  ten, 
or  you  can  have  twenty.'  I  am  not  sure  whether  it  was  not  more.  He 
said,  '  We  will  take  the  money  from  to-morrow,  but  begin  the  interest 
from  to-day.'  The  amount  of  interest  I  do  not  care  for  at  all,  but  we 
are  not  in  the  habit,  in  the  city,  of  giving  up  a  day's  interest ;  and  I 
said  to  the  person  with  me,  'Here  is  something  smoky ;'  and  said  to  the 
man  who  offered  me  the  bills,  'Do  not  consider  any  thing  binding  in 
what  I  have  done  with  you.'  I  went  to  the  stock  exchange,  and  said  to 
the  man  to  whom  I  had  been  lending  on  exchequer  bills,  '  This  is  a 
pretty  joke  ;  I  lend  you  money  at  four  per  cent,  on  exchequer  bills,  and 
go  out  and  get  an  oft'er  at  six  !'  '  Oh  !'  said  he,  '  You  may  let  me  have 
mine  back ;  but  I  will  refer  you  to  another  man.'  I  communicated  with 
that  other  man,  and  he  told  me  I  had  better  go  over  to  a  banker's  in 
Lombard-street,  and  ascertain  the  fact.  I  went  there,  and,  combining  all 
the  circumstances  in  my  mind,  it  struck  me  there  was  some  robbery,  and 
I  made  up  my  mind  and  sat  down,  and  wrote  to  the  chancellor  of 
the  exchequer.     The  whole  did  not  occupy  me  twenty  minutes."     This 


Discovery  of  the  Offender — Amount  Received.  259 

important  letter,  througli  which  the  transactions  to  be  related  were 
brought  to  light,  requested  a  few  minutes  conversation,  on  the  plea  that 
the  importance  of  the  writer's  communication  as  to  what  was  going 
on  in  the  exchequer  bill  market,  was  such  that  he  was  led  to  consider 
the  chancellor  would  not  think  his  time  lost  if  he  devoted  it  to  this  com- 
munication. 

On  the  following  morning  an  interview  was  granted,  and  Mr.  Haes 
detailed  the  transaction,  mentioning  that  the  doubts  of  Mr.  John  Frak- 
cis  Maubert  had  been  awakened  on  a  previous  occasion.  This  gentle- 
man also  had  a  meeting  with  Mr.  Goulburn,  who  was  informed  by  him 
that  in  November,  1839,  he  had  been  paid  seven  per  cent,  on  exchequer 
bills,  when  the  market  rate  of  interest  was  only  six  and  a  half  per  cent. ; 
that  as  he  considered  the  circumstance  remarkable,  he  had  declined  any 
further  transactions  with  the  same  party,  and  the  event  was  only  recalled 
to  his  mind  when  the  decision  and  promptitude  of  Mr.  Haes  had  brought 
the  affair  to  light.  So  searching  was  the  inquiry  immediately  instituted, 
and  so  easy  of  detection  was  the  fraud,  when  suspicion  Avas  aroused,  that 
by  the  25th  of  the  month,  Edward  Beaumont  Smith,  chief  clerk  in  the 
issuing  office  of  the  exchequer,  was  taken  into  custody.  "  Availing  him- 
self of  his  official  capacity,"  said  the  chancellor,  "  the  offender  has  taken 
the  bills  from  the  office  in  which  he  served,  in  order  to  forge  the  name, 
whose  signature  they  were  bound  by  law  to  bear."  In  every  other  par- 
ticular they  were  genuine  exchequer  bills,  and  there  was,  therefore,  no 
difficulty  in  procuring  money  on  them.  But  a  confederate  was  necessary  ; 
and  confederates  in  crime  are  rarely  wanting  when  wealth  is  to  be 
attained.  Ernest  Rapallo  and  Angelo  Solari,  foreigners,  long  resi- 
dent in  England,  were  the  agents  employed.  It  was  only  advisable  to 
raise  money  on  these  bills  in  the  way  of  loans,  as,  if  they  should  obtain 
a  general  circulation,  it  was  possible  that  duplicates  might  pass  into  the 
hands  of  the  same  party,  whose  doubts  would  be  aroused ;  and  it  was 
certain,  were  this  danger  even  avoided,  that  at  the  regular  periods  of  pay- 
ing off  or  exchanging  them,  a  discovery  must  inevitably  be  made. 

For  five  years  did  Edward  Beaumont  Smith,  Ernest  Rapallo  and 
Angelo  Solari  confederate  to  employ  the  vast  power  lodged  in  the  hands 
of  the  first,  in  defrauding  the  public.  By  introductions  to  brokers  and 
bankers,  by  plausible  assertions  that  there  were  friends,  great  capitalists, 
who  were  advancing  money,  and  last,  not  least,  by  the  offer  of  a  higher 
rate  of  interest  than  that  of  the  market,  did  these  men  succeed  in  their 
designs.  Upwards  of  £800,000  were  thus  procured  ;  and  as  another 
proof  that  money  wrongfully  gained  is  easily  lost,  they  paid  upon  the 
stock  and  share  markets  large  differences  with  their  dishonest  gains ;  in 
all  probability  flattering  themselves  that,  by  some  fortunate  hit,  their 
liabilities  would  be  paid  and  their  fortunes  secured. 

It  was  invariably  stipulated  that  the  very  bills  which  were  pledged 
should  be  returned  when  the  money  was  repaid,  or  on  other  exchequer 
bills  being  given.  But  this  was  not  unusual ;  it  being  a  recognised  prin- 
ciple on  the  stock  exchange  that  the  borrower  had  a  right  to  demand  a 
restoration  of  the  same  documents  which  he  had  advanced.  On  one 
occasion  some  of  them  got  into  the  market,  and  when  the  time  expired, 
the  same  bills  were  not  of  course  forthcoming.     As  soon  as  the  discoverj' 


260  History  of  the  Bank  of  England. 

■was  made  that  eleven  of  tbe  papers  returned  were  not  those  which  had 
been  lent,  great  anxiety  was  evinced,  and  after  much  trouLle  they  were 
procured,  at  an  expense  of  £50.  It  appears  strange  that  these  combined 
facts  did  not  lead  to  detection.  The  fears  of  the  money-lendors  were, 
perhaps,  allayed,  by  a  high  rate  of  interest,  and  probably  many  shut  their 
eyes,  if  not  wilfully,  yet  with  that  obstinate  resistance  to  truth  so  fre- 
quently shown  under  circumstances  which  promise  large  profits.  It  has 
been  seen  that  Mr.  Maubert  had  some  doubts  about  the  fairness  of  the 
transaction  in  which  he  had  been  engaged,  and  the  small  difterence  of  one- 
half  per  cent,  justified  him  in  remaining  quiet,  but  immediately  the  crime 
became  public,  a  hundred  incidents  could  be  remembered  by  others  ;  and  a 
hundred  communications  made  to  the  chancellor  of  the  exchequer,  either 
one  of  which,  sent  at  the  proper  time,  would,  in  all  probability,  have  led 
to  the  immediate  discovery  of  the  fraud.  The  Duke  of  Wellington  posi- 
tively asserted,  that  though  there  were  many  innocent  sufferers,  yet  a 
great  number  of  the  holders  of  the  fraudulent  exchequer  bills  were  be- 
lieved to  have  a  knowledge  that  they  had  been  issued  under  fraudulent 
circumstances. 

The  great  alarm  of  the  possessors  of  these  securities  may  be  conceived; 
and  it  was  doubtful  in  what  light  government  would  regard  many  of 
them,  as  it  was  understood  that  the  caution  used,  with  the  amount  of  the 
interest  received,  would  be  taken  into  consideration,  lest  those  who  had 
wilfully  closed  their  eyes  to  the  deception  should  be  rewarded.  A  com- 
mittee of  the  House  of  Commons  was  appointed,  who  delivered  their 
report,  and  the  result  was  a  commission  to  inquire  into  the  whole  trans- 
action. During  this  period,  the  owners  were  utterly  ignorant  as  to  the 
treatment  they  would  receive.  Their  claims  were  strongly  supported  by 
the  press ;  and  the  report  of  the  committee  was  important,  as  it  proved 
that  an  enormous  power  had  been  vested  in  the  hands  of  the  defaulter. 
"The  sole  direction  of  the  quantity  of  paper  to  be  manufactured,"  said 
this  document,  "  of  the  plates  to  be  engraved,  and  the  custody  of  the 
moulds,  plates,  and  of  the  paper  unprinted  and  printed,  of  the  press,  seal 
and  counterfoils,  as  well  as  the  entire  preparation  of  the  exchequer  bills, 
Avere  entrusted  to  the  uncontrolled  discretion  and  integrity  of  the  senior 
clerk  of  the  department  in  which  the  bills  were  prepared,  and,  during  the 
absence  of  his  assistant  clerk,  unchecked  by  any  regular  examination  of 
the  stores  or  of  the  tradesmen's  bills."  This  extraordinary  power  was 
commented  on  by  the  press.  "If  government  had  secured  the  ex- 
chequer seal  by  placing  it  in  proper  custody,  and  providing  for  its  use 
only  in  the  case  of  certain  authorized  persons,  it  would  have  been  impos- 
sible for  any  single  exchequer  clerk,  year  after  year,  to  issue  hundreds  of 
forged  bills  properly  stamped." 

The  Bank  of  England  was  deeply  interested.  On  the  21st  of  Septem- 
ber, they  had  advanced  to  Mr.  Tomkins  £11,000  for  one  month,  on  the 
security  of  certain  documents,  purporting  to  be  exchequer  bills.  The 
money  had  been  lent  upon  condition  that  if  they  w^ere  not  redeemed  at 
the  expiration  of  the  time,  the  bank  should  be  at  liberty  to  dispose  of 
them  and  pay  themselves,  with  interest.  At  the  proper  period,  Mr.  Tom- 
kins  redeemed  three,  but  being  unable  to  take  up  the  remainder,  they 
were  sent  into  the  market,  and  pronounced  spurious.     An  action  was 


Internal  Alterations.  2G1 

brought  against  Mr.  Tomkins  by  the  Bank  of  England  to  recover  the 
amount,  and  a  verdict  given  in  their  favor. 

The  arrangement  by  which  government  met  the  views  of  the  holders 
of  the  exchequer  bills  was  considered  fair  and  equitable.  In  February, 
1842,  it  was  announced  that  of  the  £377,000  in  circulation  at  the  time 
of  the  discovery,  £262,000  would  be  paid.  The  cases  were  divided  into 
four  classes,  distinguishing  the  various  degrees  of  care  which  had  been 
evinced  by  each.  Great  endeavors  were  made  to  procure  a  remission  of 
Smith's  sentence,  but  the  efforts  were  vain,  and  the  punishment  of  trans- 
portation was  awarded  to  the  offender,  who,  with  his  accomplices,  had 
received  altogether  the  amount  of  £385,000. 

The  long  period  during  which  these  forgeries  remained  undiscovered 
speaks  loudly  for  the  inefficiency  of  government  arrangements.  Against 
a  combination  of  treacherous  men  it  is  almost  impossible  to  guard, 
but  the  public  have  a  right  to  demand  that  at  least  there  shall  be  some 
mode  of  quickly  detecting,  even  if  it  be  impracticable  utterly  to  prevent 
fraud. 

The  internal  alterations  of  the  bank,  which  commenced  in  1839  and 
lasted  until  1845,  claim  a  calm,  unbiassed  statement.  While  in  the  sec- 
retary's office,  where  he  had  been  since  1837,  Mr.  William  Ray  Smee 
was  employed  to  draw  up  some  important  documents  for  the  governor,  a 
task  that  was  performed  greatly  to  the  satisfaction  of  the  latter,  it  oc- 
curred to  Mr.  Smee  that  a  proposal  to  simplify  the  working  of  the  div- 
idend warrant,  and  the  check  offices,  the  latter  of  which  was  so  termed 
from  its  operating  as  a  check  on  the  payment  of  the  national  debt, 
might  be  favorably  received  ;  and  that  he  might  compromise  no  one  save 
himself  in  the  event  of  failure,  he  handed  his  proposition  to  the  governor 
without  acquainting  the  chief  accountant.  By  the  proposed  alteration  he 
stated  that  the  work  of  the  check  office,  employing  three  principals  and 
twenty-one  clerks,  would  be  accomplished  more  effectually  with  two 
principals  and  seven  clerks.  The  project  was  approved,  a  committee  of 
directors  appointed  to  inquire  into  its  merits,  and  after  an  anxious  investi- 
gation, the  more  so  as  it  emanated  from  a  young  man  whose  financial 
abilities  Avere  not  then  generally  known,  the  proposition  was  adopted, 
and  the  scheme  carried  out.  This  important  check  on  the  payment  of 
the  national  debt,  with  all  the  intricacies  involved  in  600,000  warrants, 
being  successful,  Mr.  Smee  immediately  presented  to  the  governor  another 
plan  for  remodeling  the  whole  circulation  department  of  the  bank.  The 
importance  and  perfection  of  the  project  may  be  understood  from  the 
fact,  that  afier  it  had  been  approved  by  the  committee,  although  it  was 
reconsidered,  then  sent  to  another  committee,  then  altered,  and  again  re- 
altered,  the  original  plan,  after  several  months  close  and  careful  inquiry, 
was  ordered  to  be  carried  into  execution. 

The  scheme  was  simple.  It  was,  however,  interesting  to  the  public,  as, 
on  the  day  of  its  adoption,  the  bank  ceased  to  re-issue  its  notes.  By  the 
old  system,  the  numbers,  amounts  and  dates  of  the  latter  were  copied 
into  books,  in  the  order  in  which  they  were  received.  The  amounts  were 
then  added,  and  the  notes  posted  in  a  ledger,  that  they  might  be  referred 
to  for  the  courts  of  law  and  the  public,  in  cases  of  fraud  or  litigation. 
These  postings  were  afterwards  examined  from  a  copy  of  the  cash  books, 


262  History  of  the  Bank  of  England. 

in  which  the  notes  were  entered,  giving  the  balance  of  each  ledger.  The 
new  system  abolishes  the  entry  in  the  cash  books,  and  stamps  every  note 
on  its  entrance  with  a  number  which  gives  the  full  particulars  of  the 
parties  who  send  it  in.  The  notes  are  then  arranged  numerically,  thereby 
saving  the  copying  of  the  date  and  number,  except  the  last  two  or  three 
figures,  and  altogether  saving  the  entry  of  the  amount ;  while  the  posting, 
which  before  took  fifty,  now  employs  eight  clerks.  As  the  circulation  is 
nearly  numerically  doubled,  it  is  impossible  to  say  what  amount  is  saved 
to  the  public  ;  but,  judging  from  the  number  stated  to  be  employed  by 
the  report  of  the  committee  of  the  House  of  Commons,  it  is  probable 
that  the  old  plan  could  not  be  reverted  to  under  eighty  extra  assistants. 

On  the  day  of  its  commencement  one  hundred  and  twenty  clerks  were 
employed.  From  the  novelty  of  the  various  operations,  the  balance,  the 
great  proof  of  success,  was  not  arrived  at  till  near  eight  o'clock.  On  the 
second  day  of  its  trial,  the  same  result  was  arrived  at  by  five  o'clock. 
On  the  third  it  was  tried  by  three  o'clock,  but  without  the  same  success, 
being  £5  deficient.  Every  plan  that  could  be  imagined  was  tried  to  dis- 
cover the  supposed  error.  For  seven  hours  were  the  clerks  of  the 
department  employed  in  examining  and  re-examining  the  books.  For 
seven  hours  were  they  detained  investigating  and  reinvestigating  the 
notes,  of  Avhich  the  books  were  a  copy ;  and  it  was  curious  to  witness  a 
young  man  of  three  and  twenty,  with  unchangeable  confidence  in  the 
soundness  of  his  system,  directing,  or  attempting  all  those  experiments 
which  a  perfect  knowledge  of  tlie  accounts  suggested  as  most  likely  to 
discover  the  presumed  error.  At  ten  o'clock  the  search  was  given  up ; 
and  the  ruin  of  the  new  system  seemed  complete.  The  information 
spread  rapidly  that  the  office  had  separated  without  a  balance  ;  and  it 
could  have  been  no  pleasant  task  to  Mr.  Smee  to  meet  the  governor  next 
morning  with  the  news.  The  confidence  of  the  latter,  was,  however, 
complete  ;  the  plan  went  on  ;  a  mode  of  detection  was  adopted  ;  and  it 
is  to  be  presumed  that  the  dread  of  discovery  produced  the  note,  as  the 
balance,  a  few  days  afterwards,  was  £5  over,  and  the  very  note  which 
Lad  been  proved  to  be  missing  w-as  found  to  have  been  returned. 

A  change  in  the  working  of  the  circulation  department  had  long  been 
considered  desirable.  Mr.  Mellisu,  one  of  the  directors,  and  member 
for  the  city,  took  considerable  interest  in  the  accomplishment  of  an  al- 
teration ;  and  on  one  occasion  there  is  a  tradition  that,  being  desirous  to 
ascertain  the  real  nature  of  the  duty,  he  announced  his  determination  to 
the  principal  of  the  accountant's  office,  to  come  and  attempt  a  day's 
work.  The  morning  arrived,  and  with  it  Mr.  Mellish.  The  day  was  a 
heavy  one ;  the  business  was  new  ;  and  the  books  were  brought  him 
with  all  the  gravity  suitable  to  the  occasion,  and  perhaps  more  frequently 
than  was  absolutely  necessary.  They  came  too  fast  for  him.  In  vain  he 
exerted  himself  with  all  the  energy  of  which  he  was  capable  ;  there  was 
to  him  a  difficulty  in  finding  the  proper  folios ;  that  which  clerks,  accus- 
tomed to  the  operation,  performed  almost  intuitively,  was  a  great  exer- 
tion to  a  novice,  and,  long  before  the  day  had  passed,  Mr.  Mellish  beheld 
such  an  accumulation  of  ponderous  tomes,  both  before  and  behind  him, 
that  he  gave  up  the  attempt  in  despair,  and  from  this  period  an  alteration 
was  made  in  the  amount  of  labor,  which  was  perhaps  more  in  proportion 


Internal  Alterations.  263 

to  the  clerks'  views  of  propriety  than  before.  The  same  gentlernan — 
and  these  things,  trifling  in  themselves,  are  an  evidence  of  the  desire  of 
the  direction  to  improve  the  economy  of  the  establishment — saw  the 
principal  of  the  office  in  which  he  had  worked  in  the  area  of  the  Royal 
Exchange.  Immediately  accosting  that  gentleman,  he  earnestly  addressed 
him  on  the  subject  of  the  proposed  alteration,  and  seizing  the  button  of 
his  coat,  pulled  at  it  with  the  same  energy  with  which  he  Avas  talking, 
nor  was  it  until  the  button  was  divorced  from  the  coat  that  the  individual 
whom  the  director  held  captive  was  enabled  to  make  his  escape.  Mr. 
Mellish  may  almost  be  said  to  have  died  in  the  service  of  the  corpora- 
tion. On  the  night  of  the  fire  of  the  Royal  Exchange,  although  but  re- 
cently recovered  "from  an  attack  of  gout,  he  came  down  to  the  bank,  the 
thermometer  standing  about  ten  degrees  below  freezing  point,  saAv 
every  thing  done  to  secure  its  safety,  and  died  from  his  exertions.  Per- 
haps no  man  would  have  been  more  pleased  with  these  alterations  than 
Mr.  Mellish,  had  he  lived  to  have  witnessed  them.  But  singular  enough, 
it  was  stated  at  the  time,  that  the  greatest  difficulty  Mr.  Smee  had  to 
surmount  was,  that  Mr.  Mellish  had  proposed  several  years  before  an  al- 
teration with  a  similar  object,  and  had  abandoned  it. 

From  the  above  period  various  alterations  occupied  the  attention  of 
Mr.  Smee,  till  the  spring  of  1842,  when  a  committee  was  appointed. 
They  reported  the  triumphant  success  of  the  plan,  and  it  has  been  in  work- 
ing ever  since.  In  the  following  week,  the  same  gentleman  proposed 
another  alteration  in  the  circulation  department,  by  which  the  whole  of 
the  post-bill  office  was  successfully  re-modeled.  Mr.  William  Ray 
Smee's  influence  was  now  doubled  ;  and  the  next  step  which  he  took 
was  the  first  movement  in  the  alteration  of  the  national  debt  department, 
by  which  the  posting  in  the  dividend  office  was  abolished.  Success  pro- 
duced confidence ;  and  the  proposition  which  followed  for  an  entire 
alteration  in  the  management  of  the  national  debt,  almost  involved  in  its 
failure  or  success  the  payment  of  the  dividends  at  the  appointed  time  to 
the  public  creditor.  Looking  calmly  back  on  the  magnitude  of  this  tran- 
saction, it  appears  singular  to  reflect  on  the  confidence  reposed  in  Mr. 
Smee.  It  is  impossible  to  magnify  the  greatness  of  the  operation,  for  the 
balance  of  600,000  accounts  was  to  be  procured  by  it,  and  it  is  impossi- 
ble to  deal  with  any  thing  more  extensive  than  the  national  debt  of  Eng- 
land. The  confidence  was,  however,  absolute;  and  success  justified  the 
confidence. 

The  bank — like  other  large  establishments — is  an  epitome  of  the  world. 
Men  are  contented  to  abide  by  their  old  institutions,  and  deprecate 
change  as  evil.  It  was  very  natural  that  those  who  had  followed  one 
particular  plan  for  thirty  or  forty  years  should  be  prejudiced  in  its  favor. 
This  plan,  by  a  high  and  competent  authority,  (Mr.  Higham,  Comptroller 
of  the  National  Debt  Office,)  had  been  pronounced  perfect  in  all  its  de- 
tails ;  and  a  proposal  to  alter  perfection  must  have  sounded  to  these  gen- 
tlemen something  like  presumption.  It  was  natural  enough  for  those 
who  knew  the  working  of  the  old  system  to  think  that  a  new  plan  must 
fail ;  to  be  slow  in  recognising  its  advantages,  and  to  apprehend  a  want 
of  safety  in  various  departments  which  had  hitherto  been  regarded  as 
perfect.'  It  is  hardly  too  much  to  say,  that  the  proposer  was  deemed  arrcy- 


264  History  of  the  Bank  of  England. 

gant  by  some,  and  that  it  was  firmly  believed  by  others  that  he  would 
not  succeed  in  procuring  the  requisite  balances.  To  enter  into  a  descrip- 
tion of  the  new,  would  be  useless,  without  doing  the  same  with  the  old 
arrangements;  but  their  importance  may  be  gathered  from  the  fact  that 
the  dividend  books,  from  which  the  public  creditor  receives  his  interest, 
are  now  commenced  a  week  earlier  than  before,  while,  during  the  re- 
mainder of  the  time  that  the  books  are  closed  for  transfer,  certain  opera- 
tions are  rendered  less  laborious,  and  the  officers  have  less  to  do  than 
heretofore. 

The  task  was  difficult.  Involving  as  it  did  the  most  important  opera- 
tions of  the  bank,  with  consequences  to  the  corporation  no  less  than  to 
the  projector  in  the  event  of  failure,  it  is  probable  that  both  the  governor 
and  chief  accountant  experienced  great  anxiety  during  its  progress.  Mr. 
Smke  himself,  with  a  most  remarkable  confidence,  never  shaken  by  any 
apparent  difficulty,  went  through  it  with  unswerving  decision.  But  the 
labor  was  not  trifling.  To  initiate  those  in  a  new,  who  had  grown  gray 
in  the  practice  of  an  old,  system — to  explain  the  intricacies  of  a  fresh 
plan  to  those  who  would  have  preferred  proceeding  in  the  good  old  path, 
and  who,  at  first,  unavoidably  confused  the  one  with  the  other — to  find 
out  errors  which  had  occurred  through  ignorance  of  the  detail,  and  which 
required  a  complete  knowledge  of  it  to  detect — appeared  to  require  an 
older  head  than  his  who  now  attempted  it,  and  who  pursued  his  task  with 
a  most  unalterable  faith  in  the  excellence  of  his  scheme.  The  plan  was 
successful ;  the  balance  was  obtained ;  and  a  most  important  result,  far 
greater  than  any  pecuniary  consideration,  was  arrived  at. 

The  directors  were  enabled  so  far  to  consult  the  accommodation  of  the 
public,  as  to  enable  the  transfers  in  the  various  offices  to  be  made  eight 
or  nine  days  later  than  usual ;  the  business  which  formerly  occupied 
about  thirty-two  days  being  accomplished  in  about  twenty-three.  That 
this  is  a  most  important  result,  and  that  it  would  be  found  highly  bene- 
ficial during  monetary  crises,  may  be  gathered  from  the  fact  already 
given,  that  during  the  panic  of  1825,  when  the  demand  for  money  was 
60  extensive,  upwards  of  one  hundred  transfers  were  daily  made  as  a 
favor,  and  after  much  trouble,  by  those  whose  necessities  compelled  them 
to  sell  stock. 

The  importance  to  the  banker  and  the  merchant  can  scarcely  be  over- 
rated, as  there  must  ever  arise  periods  of  pecuniary  difficulty  when  the 
advantage  of  having  a  command  over  money  in  the  funds  is  to  the  pos- 
sessor almost  incalculable.  The  complete  results,  however,  of  these  stock- 
office  arrangements,  whatever  importance  may  be  attached  to  them,  are 
probably  not  yet  attained  either  by  the  bank  or  the  public. 

It  is  possible  that  these  pages  may  be  perused  by  parties  engaged  in 
similar  attempts  in  other  establishments.  Let  them  not  imagine  that 
these  alterations  in  the  economy  of  the  Bank  of  England  were  effected 
with  the  ease  with  which  they  have  been  related.  Let  them  remember 
that  great  operations  are  liable  to  great  difficulties ;  that  they  may  have 
to  contend  with  the  power  of  the  strong  and  the  jealousy  of  the  weak; 
that  in  some  there  may  be  the  pretension  which  promises  much,  but  pro- 
duces nothing,  wjiile  the  capacity  of  others  may  be  only  employed  in 
condemning  that  which  they  cannot  improve.      To  alter  the  system  of  a 


Continental  Conspiracy.  265 

century  is  no  trivial  task ;  to  carry  those  alterations  into  effect  requires 
no  ordinary  mind  ;  and  with  all  the  appurtenances  of  power  resolution 
of  no  common  nature  is  demanded.  The  abuses  with  which  we  arc  fa- 
miliar are  sanctioned  by  time,  or  appear  so  woven  into  the  fabric,  that 
in  destroying  the  one  Ave  seem  to  tear  down  the  other ;  and  whatever 
the  change,  there  are  always  so  many  antagonistic  interests,  and  so  many 
important  considerations,  that,  to  adopt  the  words  which  an  Edinburgh 
reviewer  applied  to  Sir  Samuel  Komilly,  he  who  Avould  alter  must,  in  all 
probability,  "  share  the  fate  of  all  propounders  of  change  in  any  institu- 
tion, be  derided  by  some,  and  by  others  be  regarded  as  the  advocate  of 
a  desperate  cause." 

Various  eftbrts  Avere  made  in  1843  to  procure  a  salutary  relaxation  of 
the  labors  of  clerks  in  banking  establishments,  although  Avithout  success, 
as  the  attempts  made  by  benevolent  persons  to  procure  an  additional 
hour  have  hitherto  failed.  The  argument  Avas  adduced  that  other  classes 
Avorked  longer  than  clerks ;  and  this  obtained  favor  Avith  those  who  Avere 
against  the"  movement.  In  May,  1843,  the  Bank  of  England,  in  com- 
pliance Avith  a  request  of  the  members  of  the  stock  exchange,  gave  notice 
that  no  transfers  Avould  be  alloAved  after  one  o'clock  on  Saturdays,  and 
that  the  future  public  days  Avould  be  Tuesday,  Wednesday,  Thursday 
and  Friday,  for  all  the  stocks.  In  the  same  year  the  light  sovereigns 
Avere  called  in,  and  much  uneasiness  occasioned  to  the  poorer  classes. 
The  bank  received  only  large  quantities ;  the  poor  man,  therefore,  was 
left  to  the  mercy  of  the  small  tradesman.  Sixpence,  and  occasionally  a 
shilling  Avas  demanded,  and  the  holder  could  only  complain  and  comply. 
Every  arrangement  Avas  made  by  the  directors  to  forward  the  business ; 
but  in  this,  as  in  other  instances,  much  dissatisfaction  Avas  evinced. 
Those  Avho  Avere  compelled  to  apply  Avere  sometimes  obliged  to  wait,  and 
their  detention  generally  gave  birth  to  a  letter  in  the  daily  papers,  about 
loss  of  time,  bad  arrangements,  Avith  unfair  complaints  against  the  clerks. 
There  is  no  public  establishment  in  Avhich  so  much  accommodation  is 
afforded  to  the  public,  or  Avhere  such  attention  is  shoAvn ;  and  there  is  no 
place  against  Avhicli  so  many  unjust  charges  are  brought.  They  generally 
emanate  from  the  small  holders  of  stock,  Avho  fancy  that  the  privilege  of 
receiving  their  dividends  twice  a  year  is  to  be  accompanied  by  a  defer- 
ence, an  obsequiousness  and  a  promptitude  Avhich  the  moneyed  man  and 
the  banker  never  think  of  claiming. 

The  total  amount  of  light  coin  received  from  the  11th  of  June  to  the 
28th  of  July,  1843,  was  £4,285,837,  and  2fd.  was  the  loss  on  each, 
taking  an  average  of  35,000.  The  large  sum  of  £1,400,  in  one  pound 
notes,  was  paid  into  the  bank  this  year.  They  had  probably  been  the 
hoard  of  some  eccentric  person  Avho  evinced  his  attachment  to  the  obso- 
lete paper  at  the  expense  of  his  interest.  A  few  years  afterwards  a  ^£20 
note  came  in  Avhich  had  been  outstanding  for  about  a  century  and  a 
quarter,  and  the  loss  of  interest  on  AA'hich  amounted  to  some  thousands. 
It  is  noAA'  the  province  of  the  Avriter  to  relate  one  of  those  occurrences 
which  occasionally  interest  the  somewhat  uneventful  hours  of  a  commer- 
cial community.  The  union  of  rank,  talent  and  accomplishment,  Avith 
fraud,  dishonor  and  dishonesty,  forms,  in  the  present  instance,  a  relation 
sufficiently  interesting  to  pass  an  hour  by  the  winter  fire-side,  and  suffi- 


266  History  of  the  Bank  of  England. 

ciently  striking  to  demand  the  attention  of  the  monetary  man,  and  the 
notice  of  the  observer  of  human  nature. 

Florence,  the  beautiful  capital  of  the  grand  duchy  of  Tuscany,  is,  both 
from  its  natural  advantages  and  its  acquisitions  in  art,  the  chosen  resi- 
dence of  many  members  belonging  to  the  most  aristocratic  families  from 
every  country  in  Europe.  Some  reside  from  choice,  others  from  necessi- 
ty. Some  are  of  unimpeachable  honor,  others  are  of  broken  fortunes 
and  questionable  reputation.  None  were  more  remarkable,  from  a  com- 
bination of  the  latter,  than  the  Marquis  De  Bourbel,  whose  family  was, 
according  to  his  own  showing,  as  old  as  the  "  rocks  of  Provence,"  and 
Cunningham  Graham,  of  Gartmore,  whose  name  is  a  sufficient  description 
of  his  country.  Although  there  might  be  a  little  gasconade  in  M.  De 
Bourbel's  description  of  his  race,  there  is  little  doubt  that  he  was 
of  an  ancient  stock,  which  could  be  traced  back  to  the  gent'dla^-dy 
or  small  gentleman  of  Normandy,  a  rank  somewhat  analogous  to  the 
better  class  of  English  yeomanry.  The  ^Marquis,  whose  immediate  ances- 
tor is  said  to  have  filled  some  subordinate  situation  under  the  Governor- 
General  of  India,  entered  life  with  no  ordinary  advantages.  While 
young  he  became  attached  to  the  French  embassy  in  Portugal,  and  after- 
wards at  Copenhagen.  From  such  situations  many  men  of  less  capacity 
have  risen  to  wealth  and  honor.  This  was  not  the  fortune  of  the  Marquis 
De  Bourbel,  who,  from  some  cause  or  another,  sunk  to  the  unenviable 
reputation  of  a  gambler,  duellist  and  roue.  His  accomplishments  were- 
varied.  A  great  linguist,  a  good  draughtsman,  a  fine  equestrian,  and  a 
skilful  fencer ;  he  rode,  fought  and  fenced,  until  he  became  a  member  of 
the  secret  French  police,  a  degradation  sufficiently  accounted  for  when 
it  is  added  that  he  was  universally  regarded  as  a  thoroughly  mauvais 
sujet.  He  appears,  indeed,  to  have  been  one  of  those  specious,  agreeable 
persons,  whom  good  men  pity,  and  with  whom  bad  men  associate.  His 
wife,  an  Englishwoman,  Avho,  with  her  fortune,  had  been  caught  by 
the  showy  exterior  of  the  Marquis,  died  broken-hearted,  shortly  after  his 
elopement  from  her  with  her  maid,  or  with  an  opera-dancer,  history  is 
uncertain  as  to  which.  But  even  the  laxity  of  the  Italian  morals  found 
the  Frenchman  too  bad  for  it,  and  he  was  compelled  in  some  measure  to 
submit  to  public  opinion,  by  retiring  to  a  country-house,  near  Leghorn, 
on  the  road  to  Florence. 

The  seclusion  of  the  Villa  Micali,  the  name  of  the  place  to  which. 
De  Bourbel  retreated,  was  often  enlivened  by  the  visits  of  the  re- 
markable man  who  has  already  been  named,  Cunningham  Graham,  of 
Gartmore,  in  Scotland.  The  bad  pre-eminence  of  the  Norman  Avas  ri- 
valled by  the  cool  craft  and  unprincipled  design  of  the  Scot.  A  large 
estate  which  had  devolved  to  him  he  had  squandered ;  the  fair  fame  of 
his  ancestors  he  had  disgraced  ;  the  honorable  name  which  had  descended 
with  his  estates  he  had  tarnished;  and,  in  1828,  he  was  compelled  to 
leave  Scotland  to  avoid  his  creditors,  in  an  exile  which  ultimately  brought 
him  to  Florence,  and  made  these  two  dangerous  men  acquainted.  Gra- 
ham, like  his  friend,  was  a  person  of  considerable  accomplishments. 
There  was,  moreover,  a  refinement  and  taste  in  him  which  was  absent  in 
his  companion.  Although  he  possessed  a  love  for  the  fine  arts,  it  was  in 
the  more  imitative  and  mechanical  ones  that  he  excelled.     With  a  turn- 


Difficulties  of  the  Conspirators.  267 

ing-lathe  he  formed  tools  ;  and  possessed  suflBcient  skill  to  work  on  rare 
engravings  of  Rafael  Morghen,  and  the  chef  cV oeuvres  of  Domenichino 
and  GuiDO  Reni,  which  he  traced  Avith  singular  success. 

Such  were  the  two  men  who  sought  each  other's  society  at  the  Villa 
Micali,  and  who  first  brooded  over  the  artful  and  daring  fraud  that  sought 
for  its  victims  all  the  great  European  bankers,  and  which,  in  its  unparal- 
leled boldness  and  cupidity,  looked  to  the  gain  of  a  million  sterling  as  its 
reward.  The  idea  was  worthy  the  crafty  brains  from  Avhich  it  emanated  ; 
and  in  order  to  carry  the  gigantic  crime  into  execution,  it  was  proposed 
to  forge  those  "lettres  circulaires,"  (better  known  in  England  as  letters 
of  credit,)  which  are  obtained  from  the  principal  bankers,  for  payment  by 
their  foreign  correspondents. 

These  letters,  which  are  issued  for  sums  varying  from  £100  to  £10,000, 
are  very  much  alike,  and  are  all  engraved  in  black  with  blank  spaces  for 
the  amount,  the  name  of  the  bearer,  and  the  banker's  signature.  The 
great  credit  and  immense  business  of  the  house  of  Glyn  «fc  Co.,  made 
them  fixed  upon  as  unwilling  assistants  in  this  bad  transaction.  On  the 
letters  used  by  this  firm  their  initials  are  stamped.  Below  them  is  the 
blank  space  for  the  various  sums  to  be  entered,  which  are  paid  until  the 
amount  of  credit  is  exhausted.  As  an  assistance  to  the  holder,  the  names 
of  the  principal  places  of  Europe  are  annexed,  with  the  bankers  to  whom 
the  credit  is  addressed  ;  thus,  to  the  first,  of  Abbeville,  is  given  that  of 
Messrs.  Daverton  and  Tiiolome,  and  to  Zante,  Lawrence  Hayes 
&Co. 

The  difficulties  were  many ;  but  such  men  as  De  Bourbel  and  Gra- 
ham delight  in  surmounting  difficulties  where  wealth  is  to  be  achieved. 
One  necessity  was  a  continental  banker  to  aid  them  with  his  experience  ; 
another  and  less  difficult  one  was  the  want  of  a  circular  letter  of  credit, 
on  which  the  imitative  capacity  of  Cunningham  Graham  might  exercise 
itself.  Allan  George  Bogle,  a  native  of  Glasgow,  son  of  a  West  India 
merchant.  Lieutenant  in  the  Royal  Navy,  and  Graham's  son-in-law,  was 
stated  to  be  chosen  by  the  conspirators  to  aid  them  in  their  bad  design. 
He  first  obtained  a  situation  as  clerk  to  a  banker  at  Florence,  through 
his  father-in-law's  interest,  and  then  contrived  to  enter  into  partnership 
with  Mr.  Kerrich  &  McCarthy,  one  of  whom  had  commercial  connec- 
tions of  the  very  highest  credit,  which  produced  a  profitable  business  to 
the  new  firm  of  Bogle,  Kerrich  &  Co. 

The  intimacy  of  De  Bourbel  and  Graham  increased,  and  the.  tracing 
room  of  the  latter  was  chosen  by  them  for  their  many  conferences.  Here, 
by  means  of  a  machine  ostensibly  employed  in  tracing  pictures,  they 
employed  themselves  in  imitating  signatures,  until  they  arrived  at  the 
most  unerring  accuracy  and  verisimilitude. 

The  commercial  connections  of  Bogle,  Kerrich  and  Co.  were,  in  the 
mean  time,  rising  fast  into  the  highest  credit.  In  March,  1839,  a  great 
move  was  made  in  the  plot  by  the  introduction  of  the  Marquis  De  Bour- 
bel as  a  constituent  to  Bogle,  Kerrich  and  Co. ;  and  the  next  step  was 
a  visit  of  De  Bourbel  to  London,  to  accelerate  those  branches  of  the 
scheme  which  could  not  be  forwarded  out  of  the  great  English  capital. 
No  sooner  had  the  Marquis  found  himself  in  England  than  he  discovered 
a  valuable  assistant  in  the  person  of  an  old  friend,  the  Baron  D'Arjuzon, 


268  History  of  the  Bank  of  Emjland. 

a  son  of  a  peer  of  France,  who  was  president  of  the  eollege  of  the  electo- 
ral department  of  the  Eure,  and  had  been  first  chamberlain  of  IIortense, 
wife  of  Loris  Bonaparte.  The  vicissitudes  of  a  gambler's  life  were  a  fit- 
ting introduction  to  the  risks  of  the  forger  ;  and  D'Arjuzon  readily  joined 
the  designs  of  his  comrade. 

The  first  object  was  to  procure  the  kind  of  paper  used  by  Glyn  and 
Co.  in  their  circular ;  an  operation  necessarily  of  great  difficulty,  but  one 
in  which  they  were  successful.  The  next  was  to  get  the  letter  of  credit 
engraved,  previous  to  which  it  was  requisite  to  procure  one  from  the 
banker  whose  paper  was  to  be  imitated,  and  whose  signature  was  to  be 
forged.  In  the  month  of  January,  1840,  an  application  was  made  to 
them  for  a  letter  of  credit.  The  transaction  was  regular,  the  money  was 
paid,  the  document  handed  over,  and  the  work  of  iniquity  proceeded  with 
expedition.  The  master  mind  of  De  Bourhel  was  in  a  congenial  element. 
One  engraver  was  employed  for  the  copper-plates;  the  seal  of  the  instru- 
ment was  engraven,  and  copies  struck  off  at  the  apartments  of  De  Bour- 
del,  which  were  then  forwarded  to  Florence,  to  Cunningham  Graham, 
who  added,  by  means  of  his  tracing  machine,  the  names  of  Glyn,  Ual- 
LiFAX,  Mills  and  Co.  All  was  now  ready  for  the  perpetration  of  that 
plot,  the  discovery  of  which  interested  every  great  commercial  house  in 
Europe.  Other  assistants  were  procured  to  the  number  of  six,  amongst 
whom  were  the  son  of  Cunningham  Graham,  and  Marie  Hosalib 
D'Arjuzon,  who  was  to  travel  under  the  title  of  the  Countess  of  Van- 
dec,  with  one  who  called  himself  the  Count  de  Paindry,  but  whose  title 
is  nowhere  to  be  found  among  those  of  the  aristocratic  families  of 
France. 

The  19th  of  April,  1840,  was  the  day  chosen  for  a  simultaneous  pres- 
entation of  the  forged  letters.  The  bankers  of  Italy,  Belgium,  and  the 
towns  on  the  Rhine,  were  chosen  as  the  chief  victims.  America,  India, 
Algiers,  or  Egypt,  was  to  be  the  rendezvous  when  the  robberies  were 
effected.  The  chief  conspirators  were  in  high  spirits.  The  elder  Graham 
declared,  in  some  intercepted  correspondence,  "  that  the  letters  were  per- 
fection, and  that  it  would  be  impossible  to  refuse  them."  De  Bourbel 
wrote  to  Graham,  the  younger,  to  be  of  good  courage,  to  act  vigorously, 
that  all  w\ns  right ;  "  and  a  proof  that  all  is  right  is,  that  Bogle  lets  him 
come  and  embark  in  the  affiiir.  Bogle  and  your  papa  are  convinced 
that  all  will  turn  out  well,  and  that  the  letters  of  credit  must  be  paid." 

After  an  interview  of  De  Bourbel  with  Bogle  on  the  21st  of  April, 
in  a  private  room,  which  lasted  upwards  of  two  hours,  the  Count  de 
Paindry  commenced  his  operations  by  presenting  a  letter  of  credit  to 
Messrs.  Bogle,  Kerrich  and  Co.  ;  and  received  upon  it  the  sum  of 
£200.  The  confederation  by  this  time  had  opened  the  campaign  in 
various  parts  of  Europe.  At  Genoa,  Messrs.  Gibbs  and  Co.  paid  £1,500 
on  the  faith  of  the  letter.  At  Turin,  £600  was  obtained  from  Nigra  and 
Son.  At  Milan,  £800  were  procured  from  Pasteur  Girod  and  Co. ;  and 
on  the  following  day  the  same  amount  was  procured  from  Louis  Laurent 
and  Co.  Rome  next  witnessed  the  pollution  of  their  presence.  £200  were 
procured  from  M.  Le  Mesurier,  and  the  next  day  £1,300  more  were  de- 
manded. So  large  a  sum  made  the  cautious  Italian  hesitate.  It  was  the 
first  time  he  had  honored  any  letter  of  Glyn  and  Co.     Pipe,  one  of  the 


Money  Obtained.  269 

subordinate  agents  affected  great  indignation.  His  father  had  sent  him 
out  to  purchase  pictures  on  commission,  and  should  the  money  not  be 
immediately  paid,  he  should  forthwith  replace  what  he  had  received,  re- 
turn to  England,  and  cause  his  father  to  enter  an  action  against  Messrs. 
Glyn  for  damages.  The  high  tone  of  this  man,  a  consultation  with  the 
English  consul  and  another  gentleman,  together  with  a  full  consideration 
of  the  circumstances,  unfortunately,  procured  the  payment  of  the  money. 

Florence  witnessed  a  curious  scene  in  this  romantic  drama.  It  has 
been  related  that  the  Count  de  PAiNDKvhad  procured  £200  from  Bogle, 
Kerrich  ife  Co.  On  the  following  day,  on  the  arrival  of  Mr.  Kerrich, 
he  found  the  count  in  earnest  conversation  with  his  other  partners.  A 
shopkeeper  of  the  name  of  Phillipson  had  doubted  the  authenticity  of 
the  letter,  and  the  high-minded  count  could  not  think  of  retaining  the 
money,  lest  it  might  possibly  injure  a  reputation  so  unsullied  as  his  own. 
*'  At  first,"  he  said,  "  I  determined,  to  pass  this  over ;  but,  on  reflection, 
it  is  a  matter  which  touches  my  honor ;  and  rather  than  have  my  name 
brought  in  question,  I  have  resolved  to  return  your  money,  and  request 
you  will  write  to  your  correspondents  and  re-assure  yourselves  in  the 
matter." 

It  may  be  easily  imagined  that,  however  Messrs.  Kerrich  and  Macar- 
THY,  the  partners  of  Bogle,  might  applaud  so  honest  an  action,  it  was 
not  without  its  reward  to  the  accomplished  count.  An  entry  was  made 
in  the  letter  as  follows :  "  The  above  payment  cancelled  by  desire  of  the 
bearer.  Bogle,  Kerrich  &  Co. ;"  and  this  would  tend  to  convince  other 
houses  of  the  correctness  of  any  transactions  he  might  have  with  them. 
From  Florence  he  sought  Bologna,  where  he  procured  £347  from  Messrs. 
Landi  &  Roncadelli  ;  and,  at  Venice  a  further  sum  of  £40  from  Du- 
bois Brothers.  At  Trieste,  Messrs.  Routh  paid  him  £1,612  6s.;  and 
one  of  the  partners  was  so  struck  with  the  count's  pleasing  manner,  that 
he  invited  him  to  his  opera-box  in  the  evening,  and  allowed  him  to  ac- 
company him  home  to  his  private  residence. 

Aft'airs  were  progressing  equally  favorably  on  the  Rhine.  The  Count- 
ess Vandec,  in  order  to  support  her  rank,  traveled  in  her  private  car- 
riage with  a  courier.  At  Coblentz  she  obtained  £500  from  Deinhard  & 
Jordan,  and  from  Gogel,  Kock  &  Co.  £520.  At  Mentz  she  procured 
£500  from  Human  &  Mappes  Fils,  and,  satisfied  with  her  success,  pro- 
ceeded to  Paris.  At  Liege,  D'Arjuzon  and  a  confederate  obtained 
£100;  and  at  Brussels  £750  from  Engler  &  Co.  Ghent  was  assailed 
by  them  on  the  23d ;  but  Messrs.  Meulemeester  &  Son  refused  to  hon- 
or the  letter,  on  the  ground  of  not  having  received  advice  from  Glyn  & 
Co.  On  the  same  day,  the  letter  of  credit  presented  to  Engler  &  Co, 
was  presented  to  M,  Agie,  at  Antwerp.  This  gentleman,  surprised  at  a 
further  advance  being  so  soon  required,  refused  to  honor  the  letter,  on 
the  ground  of  want  of  advice.  The  truth  was  that  M.  Agie  suspected  a 
fraud.  He  intimated  these  suspicions  to  M.  Engler,  who  immediately 
communicated  with  the  police ;  and  Ireland  (one  of  the  subordinate 
agents)  was  apprehended  on  the  25th  of  April,  on  board  the  Ostend 
steamer,  bound  to  London. 

The  news  passed  into  the  Brussels  journals ;  from  thence  to  Galigna- 
Ni's  Paris  papers ;  and  before  the  ramifications  of  the  conspiracy  could 
18 


270  History  of  the  Bank  of  England. 

be  discovered,  different  parts  of  the  world  received  the  actors  in  the  plot. 
The  names  of  De  Bourbel  and  Graham  were  implicated.  Mr.  Kerrich 
was  startled  by  the  receipt  of  some  documents  from  her  majesty's  envoy 
at  Florence,  in  which  the  name  of  Bogle  was  seriously  compromised. 
The  distress  of  mind  of  the  latter  appears  to  have  been  great ;  and,  after 
some  agitated  interviews  with  his  partners,  he  declared  his  determination 
of  retiring  from  the  firm,  a  letter  to  this  effect  being  drawn  up  by  Mr. 
Macarthy. 

The  first  intelligence  in  England  of  this  fraud  was  received  by  "  The 
Times'''  newspaper,  in  which  a  letter  was  published  wherein  Mr.  Bogle's 
name  was  introduced  as  one  of  the  fraudulent  parties.  The  letter  stated 
"that  a  great  forgery  company,  established  on  the  continent,  had  lately 
been  detected  and  blown  up ;  and  that  the  object  of  the  company  was  to 
plunder  the  continental  bankers  by  means  of  forged  letters  of  credit,  pur- 
porting to  be  of  the  banking  firm  of  Gltn,  Mills  <fe  Co.,  of  London." 
The  letter  then  gave  the  names  of  the  conspirators,  and  among  others  in- 
cluded that  of  Bogle,  who  immediately  commenced  an  action  against 
the  proprietors  of  "  The  Times'''  newspaper,  as  he  was  unable  to  sup- 
port the  idea  of  his  name  and  character  being  questioned.  The  behavior 
of  the  conductors  of  "  The  Times'''  was  worthy  of  their  high  reputation. 
Disregarding  expense,  they'  sent  Mr.  Dobie,  their  solicitor,  and  Mr. 
Kirwan,  a  barrister,  to  the  continent ;  there,  after  an  anxious  search  and 
harassing  difficulties,  a  body  of  evidence  was  obtained  from  which  the 
above  circumstances  have  been  collected,  and  which,  perhaps,  have  never 
been  surpassed  in  the  annals  of  jurisprudence. 

The  character  of  the  plaintiff  was  estimated  at  one  farthing  by  the 
jury,  which  was  the  amount  of  damages  granted  by  them.  The  judge 
refused  to  certify ;  and  the  expenses  of  Mr.  Bogle,  therefore,  were  paid 
out  of  his  own  purse.  The  testimony  paid  to  the  proprietors  of  "  The 
Times'''  was  worthy  the  vigorous  and  honorable  course  of  that  paper ;  nor 
is  it  possible  to  praise  too  highly  the  promptitude  which  published  the 
account,  the  boldness  which  printed  names  at  a  risk  so  great,  or  the  skill 
that  collected  the  evidence  which  justified  its  conduct  in  the  eyes  of  all 
Europe.  The  following  will  give  some  idea  of  the  fate  of  the  various 
conspirators : 

De  Bourbel  retreated  to  Spain ;  but  is  supposed  to  have  been  in  Lon- 
don at  the  time  of  the  trial,  and  to  have  supplied  Bogle  with  cash,  and 
what  would  be  more  valuable,  with  the  counsel  of  his  crafty  brain. 

The  Count  De  Paindry  was  overtaken  in  Moldavia,  and  compelled  to 
disgorge  some  of  his  plunder ;  was  delivered  over  by  the  police  of  Con- 
stantinople, and  sent  to  Genoa,  and  thence  to  Aix,  where  the  court  de- 
clared its  incompetency  to  take  cognizance  of  the  aflfair,  and  he  was  dis- 
missed. Alexander  Graham  died  at  a  maison  de  sante,  in  great  want 
and  misery. 

Graham  the  elder,  D'Arjuzon,  his  mistress,  and  Pipe,  do  not  appear 
to  have  suftcred  any  molestation  on  account  of  their  share  in  the  transac- 
tion, other  than  that  they  were  compelled  to  decamp  very  suddenly ;  so 
that  the  only  party  punished  in  connection  with  a  fraud  of  unexampled 
magnitude,  laid  with  consummate  skill,  and  put  into  execution  with  bold- 
ness that  ensured  its  success,  was  the  journal  which  put  the  commercial 


Tribute  to  "  The  Times:'  271 

men  of  all  Europe  on  their  guard,  broke  up  the  confederacy,*  and  pre- 
vented the  loss  of  thousands.  The  expenses  of  "TAe  Times''  are  known  to 
liave  amounted  to  many  thousand  pounds. 

"  The  bold  and  manly  conduct  of  '  The  Times,'  in  publishing  the 
original  account  of  the  confederacy,  the  resolution  with  which  they  stood 
the  attack,  as  well  by  pleading  justification  instead  of  an  evasive  plea,  as 
the  enormous  expense  they  went  to  to  support  the  plea,  and  the  import- 
ant consequences  resulting  from  the  whole  proceeding,  did  not  escape 
the  observation  of  the  merchants  and  bankers,  and  was  greatly  appre- 
ciated by  them.  A  committee  was  formed;  subscriptions  poured  in  from 
every  quarter ;  the  corporation  of  the  city,  the  companies,  the  incorpo- 
rated bodies  of  every  kind,  merchants,  bankers  and  tradesmen,  and  even 
private  parties,  hastened  to  forward  very  handsome  contributions.  Xor 
were  the  leading  merchants  and  bankers  of  the  continent  at  all  backward  ; 
they,  indeed,  were  the  parties  chiefly  aimed  at,  and  they  came  forward 
very  handsomely,  so  that  in  the  course  of  a  few  months  the  subscription 
amounted  to  £2,700. 

"  The  proprietors  of  '  The  Times'  now  added  another  honor  to  those 
they  had  already  gained,  for,  declining  any  of  the  customary  forms 
in  which  tributes  of  this  nature  are  usually  embodied,  they  requested  that 
some  mode  should  be  chosen  by  which,  at  once,  the  memory  of  the  oc- 
casion might  be  perpetuated,  and  the  community  benefited ;  and  it  was 
finally  decided,  that,  with  the  exception  of  the  expenditure  of  a  trifling 
sum  in  tablets,  with  suitable  inscriptions,  one  to  be  placed  in  the  Royal 
Exchange,  and  the  other  in  a  conspicuous  part  of  '  The  Times'  printing 
establishment,  the  whole  of  this  sum  should  be  appropriated  to  the  foun- 
dation of  two  scholarships,  to  be  given  to  youths  elected  from  Christ's 
Hospital  and  the  city  of  London  school,  to  the  universities  of  Cambridge 
or  Oxford." 

*  The  forgery  of  bank  notes  has  beeu  lessened  of  late  years  by  means  of  greater 
skill  in  engraving,  and  a  better  quality  of  paper.  The  Edinburgh  Review,  on  this 
question,  said:  "  It  must  not  be  forgotten  that  an  improvement  in  bank  paper,  far 
short  of  what  could  be  accepted  as  a  substitute  for  cash  payments,  would  be  an  ob- 
ject of  the  utmost  public  importance.  When  that  paper  is  restored  to  its  original 
character,  and  once  more  rendered  secure  against  the  evil  of  excessive  issue,  it  will 
still  be  liable  to  attacks  from  the  other  evil  of  forgery,  which  has  arisen  and  become 
formidable  during  the  fatal  {)eriod  when  payments  were  not  made  in  money.  The 
former  mischief  may  be  immediately  removed,  but  the  effects  of  the  latter  must  con- 
tinue, in  some  degree,  for  some  time.  When  we  retm-n  to  our  ancient  system,  we 
ought  to  return  to  that  part  of  it  which  consisted  in  the  prohibition  of  the  issue  of 
notes  under  five  pounds.  The  great  body  of  forgeries  consists  in  notes  of  one 
pound.  In  the  last  year  they  were  about  thirty  thousand.  But  the  crime  created 
by  these  small  notes  has  spread  to  the  larger,  wliich,  when  they  circulated 
alone,  can  scarcely  be  said  to  have  been  forged  at  all.  Five  hundred  forged  notes, 
of  ten  pounds  and  upwards,  appear  to  have  been  detected  in  the  last  year  by  the 
bank.  How  many  more  never  reached  them  we  cannot  conjecture ;  they  were, 
probably,  numerous ;  though  we  should  be  inclined  to  make  a  large  deduction 
from  the  estimate  of  a  respectable  member  of  Parliament,  who  said,  that  half  the 
Bank  of  England  notes  circulated  in  the  three  northern  counties  were  forgeries. 
After  the  resumption,  indeed,  of  cash  payments,  forgery  of  the  large  notes  will  be 
immediately  limited  by  tlie  skill  and  leisure  of  the  class  among  whom  they  circu- 
late, and  by  the  facility  of  refusing  paper  when  there  is  a  power  of  procuring 
nionev. 


272  History  of  the  Bank  of  England. 


CHAPTER    XXIV. 

THE    INCOME    TAX ITS     PAYMENT     ON     ANNUITIES THE    BANK    CHARTER    ACT    OF    1844 

ITS  PROVISIONS SPEECH  OF    SIR    ROBERT    PEEL JONES   LLOYD THE    COUNTRY    BANKERS 

PETITION     OF    THE     LONDON     BANKERS ITS     RESULT NEW     ARRANGEMENTS WtLL 

FORGERIES. 

The  advent  of  Sir  Robert  Peel  to  power,  in  1842,  was  a  circum- 
stance of  some  importance  to  the  Bank  of  England.  The  powerful  ma- 
jority by  Avhich  he  was  supported  rendered  it  almost  undoubted  that  he 
would  maintain  the  position  in  which  he  had  been  placed  by  the  coun- 
try, when  the  expiration  of  the  first  ten  years  allowed  by  the  charter  for 
the  continuance  of  the  privileges  of  the  corporation  should  arrive  ;  and  it 
was  almost  equally  certain  that  he  would  modify  the  principles  on  which 
it  had  liitherto  being  founded,  according  to  his  own  views  of  the  neces- 
sities of  the  monetary  world.  The  position  of  the  country  at  this  period 
was  very  critical.  A  feeling  of  discontent  was  prevalent  among  the 
agrarian  and  manufacturing  population.  An  empty  treasury,  a  failing 
revenue  and  a  dissatisfied  people  were  sufiicient  to  render  the  government 
of  the  nation  a  difficult  task.  But  the  prospect  of  our  foreign  relations 
was  by  no  means  cheering.  The  Chinese  question  was  unsettled.  We 
were  waging  an  expensive  but  ineftective  war  with  an  empire  which 
reckoned  its  people  by  myriads.  In  the  East  we  saw  the  power,  which 
had  been  won  by  a  Clive,  supported  by  a  Hastings,  and  consolidated 
by  a  Wellesley,  jeopardized  in  a  manner  which  roused  the  sympathy  of 
the  whole  nation.  The  integrity  of  the  Turkish  empire  was  supported 
against  the  capacity  of  one  of  the  great  men  of  the  day,  and  against  the 
inclination  of  France,  the  government  of  which  maintained  an  armed 
and  haughty  neutrality,  while  her  people  were  prepared  to  spring  with 
the  fierceness  of  their  nature  on  the  enemy  they  denounced.  The  streets 
of  Palis  saw  groups  of  men,  with  earnest  and  threatening  gesture,  clam- 
oring against  the  perfidy  of  England  ;  and  the  voice  of  the  press  spread 
the  contagion  throughout  her  provinces.  America  advanced  claims 
which  the  dignity  of  Great  Britain  rejected. 

These  things  were  ominous,  and  required  a  practiced  skill  to  grapple 
with  them.  The  danger,  however,  passed  away.  India  was  preserved, 
and  China  yielded  up  her  undignified  isolation.  From  the  Chinese  ex- 
pedition came  a  treasure,  which,  for  the  first  time  in  the  history  of  the 
Bank  of  England,  placed  Avithin  its  keeping  a  metal,  which,  under  the 
name  of  Sycee  silver,  had  never  before  been  within  her  vaults ;  and 
which  was  an  object  of  almost  universal  interest. 

The  pride  of  France  was  soothed  by  time.  The  breach  with  America 
was  healed  through  the  agency  of  an  Ashburton  ;  and  by  the  imposition 
of  an  income  tax  the  finances  were  restored  to  a  healthy  condition.  The 
labor  of  the  officers  of  the  bank  Avas  greatly  increased  by  the  deduction 
of  the  property-tax  from  more  than  half  a  million  of  dividends  belonging 
to  the  public  creditor,  and  the  interests  of  the  corporation  were  yet  more 


Income  Tax.  273 

deeply  involved  in  this  tax,  as  it  opened  the  question  with  regard  to  the 
justice  of  paying  the  charge  upon  terminable  annuities.  In  many  in- 
stances these  annuities  would  expire  in  a  very  few  years;  and  in  the  case 
of  the  bank,  which  possessed  the  dead  weight  and  other  annuities,  en- 
tered into  without  any  idea  of  such  a  tax,  it  appeared  to  the  proprietors 
a  very  objectionable  impost.  It  was  argued  by  these  gentlemen,  at  a 
meeting  of  the  court,  that  it  would  not  be  equitable  to  compel  them  to 
pay  the  income  tax*  on  annuities,  as  it  would  be  in  reality  paying  on  the 
capital.  A  motion  was  carried  requesting  the  governor  and  directors  to 
memorialize  the  government  on  the  question ;  but  the  attempt  was  vain, 
as  it  was  determined  that  no  difference  should  be  made  between  the  divi- 
dend of  the  fundholder  and  the  payment  of  the  annuitant. 

In  1844  a  reduction  was  made  in  the  whole  of  the  funds  which  bore 
an  interest  of  three  and  a  half  per  cent.      Money  had  been  abundant  ;f 


*  There  is  no  way  of  ascertaining  the  incomes  of  individuals  except  by  an  actual 
inquii-y  into  their  private  concerns,  which  is  an  intolerable  grievance,  or  by  fixing  it 
according  to  certain  general  rules,  which,  applying  but  very  imperfectly  to  the  com- 
plex concerns  of  society,  must  comprehend  innumerable  exceptions,  and  conse- 
quently innumerable  cases  of  the  grossest  ineqicality  and  oppression.  It  is  in  this 
way,  accordingly,  that  agriculture  is  oppressed  by  the  property-tax.  The  income 
of  the  farmer  is  in  all  cases  estimated  to  be  exactly  equal  to  one-half  his  rent. 
No  allowance  is  made  for  adverse  seasons,  unskilful  management,  fluctuating  prices, 
or  for  the  various  other  casualties  incident  to  agricultural  concerns ;  and  no  in- 
quiry is  made  into  the  actual  circumstances  of  any  farmer.  The  same  rigid  rule  is 
indiscriminately  applied,  and  the  same  rate  of  contribution  exacted,  even  though 
there  should  be  no  income;  and  it  is  under  this  monstrous  injustice  that  both 
the  lauded  proprietors  and  their  tenants  are  at  present  suffering. — Edinburgh  Re- 
view, Feb.,  1826,  pp.  146,  147. 

The  income  tax,  notwithstanding  these  objections,  was  adopted  by  the  House  of 
Commons  in  the  year  1Y99  ;  the  loan  of  that  year  being,  for  Great  Britain  and  Ire- 
land, .£18,500,000,  besides  £3,000,000  of  exchequer  bills.  But  in  comparing  the 
amount  of  the  loans  which  would  have  been  necessary  if  this  system  of  increasing 
the  supplies  raised  within  the  year  had  not  been  adopted,  with  that  actually  con- 
tracted under  the  new  system,  it  was  satisfactorily  shown  by  Mr.  Pitt  that  no  less 
than  £120,000,000  would  ultimately  be  saved  to  the  nation  by  the  more  manly 
policy,  when  the  interest  which  was  avoided  was  taken  into  account — a  striking 
proof  of  the  extraordinary  difference  to  the  ultimate  resources  of  a  country,  which 
arises  from  raising  the  supplies  within  the  year,  and  providing  them,  in  great  part, 
by  the  funding  system. — Alison's  Europe,  vol.  2,  p.  400. 

\  The  reviving  prosperity  of  the  country,  in  consequence  of  the  cessation  of  the 
import  of  grain,  and  increased  issue  of  notes  in  1843  and  1844,  had  so  raised  the 
price  of  stocks  as  enabled  the  chancellor  of  the  exchequer  to  bring  forward  a  bill, 
in  March,  1844,  for  the  further  reduction  of  the  whole  public  funds,  excepting  the 
three  per  cents.  The  three  and  a  half  per  cents,  which  composed  £250,000,000  out 
of  the  £760,000,000,  which  formed  the  public  debt,  had  stood,  in  the  beginning  of 
the  year,  at  \0^\,  and  of  course  a  fair  opportunity  was  presented  of  paying  them  off 
at  par.  Mr.  Goulburn  was  not  slow  in  taking  advantage  of  this  auspicious  state  of 
things  ;  and  he  brought  forward,  on  8th  March,  a  proposal  for  the  conversion  of  the 
three  and  a  half  into,  first,  three  and  a  quarter,  and  ultimately  three  per  cents.  The 
first  reduction  was  to  take  place  immediately,  the  last  in  ten  years.  By  this 
means  he  calculated  that  he  could  effect  a  saving  at  once  of  £625,000  a  year,  and 
in  1854  of  £1,250,000.  As  this  reduction  was  accompanied  with  an  offer  to  pay 
off  the  dissentients  at  par,  it  involved  no  breach  whatever  of  the  public  faith,  and 
was  received  in  the  most  favorable  manner  by  both  sides  of  the  house,  and  the  pub- 
lic generally.  The  result  fully  justified  the  chancellor's  expectations,  for  the  debt 
held  by  the  dissentients  was  a  perfect  trifle,  only  £200,000,  and  was  immediately 


274  History  of  the  Bank  of  England, 

the  three  per  cent,  consols  ■were  above  100  ;  and  there  could  not  be  a 
more  favorable  period  for  the  operation.  The  idea  had  lono;  been  preva- 
lent that  the  dividends  upon  this  stock  would  be  reduced  ;  and  those 
proprietors  who  lived  upon  their  interest  evinced  great  anxiety  when  it 
was  known  that  the  alteration  was  decided  on.  The  proposition,  how- 
ever, was  one  Avhich  met  with  much  favor.  Instead  of  an  immediate  re- 
duction to  three  per  cent.,  it  was  announced  that  for  the  first  ten  years 
the  three  and  a  half  per  cents  would  be  lowered  to  three  and  a  quarter, 
and  after  that  to  three  per  cent. ;  at  the  same  time  they  were  guaranteed 
against  any  further  alteration  for  the  succeeding  twenty  years.  The 
dividends  of  the  greatest  portion  of  the  stock  had  hitherto  been  paid  in 
January  and  July,  but  they  were,  from  this  period,  receivable  in  April 
and  October.  Three  months'  dividend  was  paid  to  all  the  holders  of  the 
new  three  and  a  quarter  per  cents,  and  this  arrangement  possessed  the 
advantage  of  equalizing  the  half-yearly  amount  of  interest  paid  to  the 
national  creditor.  The  operation  was  altogether  very  successful,  and  met 
with  great  approval  from  those  who  were  considered  most  capable  of 
judging  of  its  merits. 

The  history  of  the  last  bank  charter  act  has  now  to  be  detailed.  It  is 
a  history  fraught  with  interest,  no  less  from  its  importance  than  from  the 
strange  misunderstanding  which  arose  during  its  progress.  For  some 
time  previous  great  speculation  existed  as  to  the  character  of  the  act; 
and  the  future  policy  of  Sir  Robert  Peel  was  looked  forward  to  with 
considerable  earnestness.  The  question  of  the  circulation  was  widely 
discussed ;  but  a  perusal  of  the  numerous  pamphlets  appeared  to  render 
it  impossible  to  reconcile  the  contending  opinions  which  obtained.  It 
was  a  fortunate  circumstance  for  the  corporation  that  those  upon  whom 
the  management  of  the  detail  devolved  were  successful  in  obtaining  the 
confidence  and  esteem  of  Sir  Robert  Peel.  They  had  a  most  difficult 
task  to  perform.  They  had  to  reconcile  the  rights  of  the  proprietors 
with  the  public  interest.  They  had  firmly  to  resist  a  strong  pressure 
from  without ;  and  they  had  to  accommodate  their  views  to  those  princi- 
ples by  which  it  was  resolved  to  frame  the  charter.  Their  correspond- 
ence proves  that  they  did  not,  by  servilely  yielding  at  once,  sacrifice  the 
rights  of  the  proprietors,  but  where  they  were  compelled  to  give  way, 
they  did  so  from  the  conviction  that  resistance  was  useless. 

The  few  words  of  Sir  Robert  Peel  are  sufficient  evidence ;  he  said, 
"I  must,  in  justice  to  the  gentlemen  who  conducted  the  negotiation  on 
the  part  of  the  bank,  declare  that  I  never  saw  men  influenced  by  more 
disinterested  or  more  public-spirited  motives  than  they  have  evinced 
throughout  our  communications  with  them.     They  have  reconciled  their 


paid  off.  The  success  of  this  measure,  whereby  the  old  £5  and  £4  per  cents  were 
at  length,  as  in  October,  1854,  reduced  to  three  per  cent ,  afforded  the  clearest 
demonstration  of  the  erroneous  principle  on  which  Mr.  Pitt  originally  proceeded  in 
borrowing  so  large  a  proportion  of  the  public  debt  in  the  three  per  cents,  instead 
of  the  five  or  four  per  cents ;  for  if  the  latter  system  had  been  universally  adopted, 
the  saving  effected  on  the  interest  of  the  public  debt,  which,  at  this  time,  was 
£760,000,000,  in  round  numbers,  would  have  been,  between  1815  and  1854,  no  less 
than  two-fifths  of  the  entire  interest,  or  above  £100,000,000  a  year, — Alison's -4 ti- 
mial  Register,  1844,  pp.  153,  155 ;  Pari.  Deb.  vol.  73,  pp.  361,  385. 


Proposed  Alterations — Resolutions.  275 

duties  as  managers  of  a  great  institution,  bound  io  consult  tlie  interests 
of  the  proprietors,  with  enlightened  and  comprehensive  views  of  the 
public  interests."  On  a  subsequent  occasion,  Sir  Charles  Wood  re- 
marked, and  the  opinion  is  valuable  as  the  expression  of  an  opposite 
political  faith,  "  I  will  only  say,  that  the  more  we  inquired  into  the  con- 
duct of  the  directors  in  the  management  of  the  bank  affairs,  the  more  I 
was  convinced  of  the  injustice  of  the  greater  part  of  the  charges  which 
had  been  made  against  them  ;  I  was  convinced  that  whatever  they  did, 
they  did  in  the  belief  that  it  was  for  the  best,  for  the  public  interest ; 
and  above  all,  I  believe  that  they  have  not  been  swayed  by  any  considera- 
tions of  their  mere  private  interests." 

The  question  of  the  renewal  was  opened  by  a  letter  addressed  to  the 
governor  and  deputy-governor  by  the  right  honorable  Henry  Goulburn, 
then  chancellor  of  the  exchequer,  proposing  certain  alterations  in  the  act, 
and  entering  very  minutely  into  the  question.  To  the  suggestion  since 
carried  into  effect,  that  a  publication  of  the  affairs  of  the  corporation 
should  be  made  weekly,  although  the  reply  of  the  bank  authorities  offered 
no  objection,  they  intimated  a  doubt  whether  the  publication  of  the  bank- 
ing accounts  could  be  considered  essential ;  and  to  the  proposal  to  remove 
the  prohibition  then  in  force,  as  to  drawing,  accepting  or  paying  bills 
within  the  sixty-five  mile  circle  round  London,  they  alluded  in  the  remark 
that  the  bank  might  incur  some  loss  in  its  banking  department ;  and  in 
the  more  serious  objection,  that  if  such  power  should  be  exercised  for  the 
purpose  of  circulation,  it  might  interfere  with  the  great  object  of  the 
projected  measures.  It  will  be  seen  that  Sir  Robert  Peel  made  an 
emphatic  declaration  concerning  this  remonstrance.  The  fear  thus  ex- 
pressed was  fulfilled  by  the  result.  Many  such  attempts  were  made  to 
establish  a  spurious  and  illegal  circulation.  They  were,  however,  quickly 
exposed  ;  exposure  produced  failure ;  and  they  are  only  worth  mention- 
ing as  a  short-sighted  policy,  which  met  with  the  fate  it  merited. 

The  reply  of  the  bank  was  considered  satisfactory  by  the  ministry, 
who  refused  to  hold  out  any  prospect  of  an  abatement  of  the  terms  which 
the  bank  were  to  pay  for  their  advantages,  and  the  correspondence  con- 
cluded with  the  acceptance  of  the  conditions  of  Mr.  Goulburn.  These 
letters  afford  an  additional  proof  that  the  government  had  no  intention  of 
allowing  the  bank  to  increase  its  circulation  above  fourteen  millions. 
The  following  is  a  copy  of  the  "  Resolutions  to  be  proposed  in  committee 
on  the  Bank  of  England  charter  acts,  on  Monday,  the  20th  of  May,  1844," 
which  were  appended  to  the  letters  of  the  contracting  parties  : 

1.  "That  it  is  expedient  to  continue  to  the  Bank  of  England  certain 
privileges,  subject  to  certain  conditions. 

2.  "  That  the  Bank  of  England  should  henceforth  be  divided  into  two 
separate  departments ;  one  confined  to  the  issue  and  circulation  of  notes, 
the  other  to  the  banking  business, 

3.  "  That  it  is  expedient  to  limit  the  amount  of  securities  upon  which 
it  shall  be  lawful  for  the  bank  to  issue  notes,  payable  on  demand,  and 
that  such  amount  shall  only  be  increased  under  certain  conditions  to  be 
prescribed  by  law. 


276  History  of  the  Bank  of  England. 

4.  "  That  a  weekly  j)ublication  shall  be  made  of  the  circulation  and 
the  banking  departments  of  the  Bank  of  England. 

5.  "That  it  is  expedient  to  repeal  the  law  which  subjects  the  notes  of 
the  bank  to  stamp  duty. 

.  6.  "That  the  rate  of  payment  by  the  bank  shall  be  £180,000  per 
annum. 

7.  "  That,  in  the  event  of  any  increase  of  securities,  as  aforesaid,  a  fur- 
ther annual  payment  shall  be  made  by  the  bank  equal  in  amount  to  the 
net  profit  derived  from  such  additional  securities. 

8.  "  That  it  is  expedient  to  prohibit  the  issue  of  notes,  payable  on  de- 
mand, by  any  bank  not  now  issuing  notes,  or  by  any  bank  hereafter  to  be 
established. 

9.  "  That  it  is  expedient  to  provide  that  such  banks,  in  England  and 
Wales,  as  now  issue  notes,  payable  on  demand,  shall  continue  to  issue 
them,  subject  to  such  conditions  as  may  be  provided  for. 

10.  "  That  it  is  expedient  to  provide,  by  law,  for  the  weekly  publication 
of  the  amount  of  notes  payable  on  demand. 

11.  "That  it  is  expedient  to  make  provision,  by  law,  with  regard  to 
joint-stock  banking  companies." 

The  principles  of  the  bill  did  not  meet  with  much  admiration  among 
the  country  bankers,  who,  naturally  enough,  looked  upon  the  system 
which  yielded  them  large  profits  as  a  very  excellent  system,  and  thought 
all  interference  not  only  unpleasant  but  unnecessary.  The  memorials 
which  they  presented  to  government  met  with  attention ;  and  where  it 
was  shown  that  an  alteration  would  be  an  improvement,  it  was  readily 
adopted. 

The  speech  of  Sir  Robert  Peel,  on  the  evening  of  the  6th  of  May, 
1844,  will  well  repay  perusal.  The  subject  was  one  to  which  his  mind 
had  long  been  devoted.  From  the  year  1819,  when  that  bill,  which  is 
indelibly  associated  with  his  name,  received  the  assent  of  the  legislature, 
up  to  the  period  when  the  renewal  of  the  bank  charter  act  occupied  the 
attention  of  the  house,  the  name  of  this  gentleman  is  to  be  found  in  all 
those  debates  which  affected  the  welfare  of  the  Bank  of  England.  The 
opening  of  his  oration  evinced  his  sense  of  the  importance  of  the  move- 
ment. "  There  is  no  contract,  public  or  private ;  no  engagement,  national 
or  individual,  which  is  unaffected  by  it.  The  enterprises  of  commerce, 
the  profits  of  trade,  the  arrangements  made  in  all  the  domestic  relations 
of  society,  the  wages  of  labor,  pecuniary  transactions  of  the  highest 
amount  and  the  lowest,  the  payment  of  the  national  debt,  the  provision 
for  the  national  expenditure,  the  command  which  the  coin  of  the  lowest 
denomination  has  over  the  necessaries  of  life,  are  all  affected  by  the  de- 
cision to  which  we  may  come." 

On  the  lYth  of  April,  1844,  the  committee  of  country  bankers  held  a 
meeting,  and  passed  several  resolutions  indicative  of  their  alarm  that  Sir 
Robert  Peel  would  propose  certain  alterations  in  the  local  circulation ; 
and  calling  on  all  their  brethren  to  co-operate  with  them  in  a  strenuous 
opposition.  Their  reasons  for  this  mode  of  action  were,  that  government 
had  refused  to  declare  its  views  prior  to  mooting  the  question  in  Parlia- 
ment; and  as  the  weakest  fortress  makes  the  greatest  show  of  resistance, 


Clauses  of  the  new  Bill.  277 

so  they  endeavored  to  guard  themselves  in  that  part  where  attack  was 
most  to  be  expected,  and  most  dangerous. 

Their  resolutions  were  alluded  to  in  the  speech  of  the  right  honorable 
gentleman,  who  expressed  his  conviction  that  their  own  assertions  were 
sufficient  to  condemn  their  cause,  with  his  hope  that  no  member  of  the 
senate  would  respond  to  an  appeal  which  demanded  him  to  come  into 
that  house  pledged  to  a  specific  course  of  action,  as  though  no  statement 
and  no  argument  could  add  to  his  knowledge,  or  throw  any  light  upon 
the  intricate  subject. 

The  following  is  a  digest  of  the  clauses  of  the  new  bill : 

1.  That  from  and  after  the  31st  of  August,  1844,  the  issue  of  notes 
payable  on  demand  shall  be  kept  distinct  from  the  banking  business,  and 
that  it  shall  be  conducted  in  a  separate  department,  to  be  called  ''  The 
issue  department  of  the  Bank  of  England." 

2.  That  on  the  31st  of  August,  1844,  the  bank  shall  transfer  to  the 
issue  department  securities  to  the  value  of  fourteen  millions,  the  debt  due 
by  the  public  to  be  deemed  part ;  that  the  banking  shall  transfer  to  the 
issue  department  all  the  gold  coin  and  gold  and  silver  bullion  not  re- 
quired ;  that  the  issue  department  shall  deliver  to  the  banking  depart- 
ment such  an  amount  of  notes  as,  with  those  in  circulation,  shall  equal 
the  securities,  coin,  and  bullion  transferred  to  the  issue  department. 
That  the  bank  may  not  increase,  but  may  diminish  the  amount,  and 
again  increase  it  to  any  sum  not  exceeding  fourteen  millions. 

3.  That  the  bank  may  not  retain  in  their  issue  department  at  one 
time  more  silver  than  one-fourth  of  the  gold  coin  and  bullion  held  at  the 
time. 

4.  That  the  notes  of  the  bank  shall  always  be  payable  in  gold  on  de-    ''' 
mand,  at  the  rate  of  £3  l7s.  9d.  per  ounce. 

5.  That,  if  any  country  banker  shall  cease  to  issue  his  own  paper,  the 
Bank  of  England  may  issue  additional  notes  to  the  amount  of  two-thirds 
of  the  authorized  issue  of  the  said  banker. 

6.  That  a  weekly  report  of  the  accounts  of  the  issue  and  banking  de-  ^ 
partments  be  published  in  the  "  London  Gazette.'''' 

7.  That  the  notes  of  the  bank  shall  be  freed  from  the  payment  of 
stamp  duties. 

8.  That  £180,000  per  annum  shall  be  deducted  from  the  charge  made 
for  the  management  of  the  national  debt. 

9.  That  if  (under  provision  5)  the  circulation  of  the  bank  shall  be  in- 
creased, the  net  profit  of  such  circulation  shall  also  be  deducted  from  the 
above  charge. 

10.  That  no  other  banks  of  issue  be  allowed  than  those  in  existence  on 
the  6th  of  May,  1844. 

11.  That  after  the  passing  of  this  act  no  banker  may  issue,  in  England 
and  Wales,  any  bill  of  exchange  or  promissory  note  on  demand,  except- 
ing such  bankers  as  were  in  existence  on  the  6th  of  May,  1844,  who  shall 
only  continue  to  issue  them  under  the  conditions  hereinafter  mentioned. 
That  the  right  to  issue  notes  shall  not  be  compromised  by  the  admission 
or  retirement  of  any  partners.  That  no  company  now  consisting  of  six> 
or  less  than  six  partners,  shall,  if  they  exceed  that  number,  be  allowed  to 
issue  notes. 


278  History  of  the  Bank  of  England. 

1 2.  That  if  any  banker  shall  become  bankrupt,  or  sliall  cease  to  issue 
notes,  be  shall  not  resume  the  issue. 

13.  That  the  average  amount  of  the  twelve  weeks'  circulation  prior  to 
the  27th  of  April,  1844,  shall  be  taken  of  those  bankers  who  issue  notes, 
and  they  may  continue  to  issue  them,  provided  they  shall  not,  on  four 
weeks'  average,  circulate  more  than  the  average  previously  taken. 

14.  That  if  two  or  more  banks  become  united,  the  same  principles 
shall  apply  to  their  issue. 

15.  That  the  average  circulation  of  the  country  bankers,  the  twelve 
weeks  prior  to  the  27th  of  April,  1844,  shall  be  published  in  the  '^'^  London 
Gazette,^''  and  this  Gazette  shall  be  received  as  evidence  of  thecir  culation 
allowed  to  such  banker. 

16.  That  if  two  or  more  banks  unite,  the  same  principle  shall  be 
applicable  to  them  ;  but  it  shall  not  be  lawful  for  them  to  issue  notes 
when  the  partners  exceed  six. 

1 7.  That  if  any  country  banker  exceed  his  authorized  amount,  he  shall 
forfeit  a  sum  equal  to  the  sum  issued  in  excess. 

18.  That  a  weekly  account  shall  be  sent  by  every  banker  issuing  notes, 
on  and  after  the  19th  of  October,  1844,  to  the  commissioners  of  stamps 
and  taxes,  of  the  amount  in  circulation  each  day  of  the  week ;  and  also 
an  average  amount  of  the  said  weekly  circulation  ;  and  on  the  expiration 
of  every  four  weeks,  the  average  amount  of  the  said  notes,  with  the 
amount  authorized,  shall  accompany  the  weekly  account.  The  weekly 
average  to  be  published  in  the  "  London  Gazetted  Any  banker  rendering 
a  false  account  to  forfeit  for  each  offence  £100. 

19.  That  the  average  amount  of  the  issue  of  each  banker  is  not  to  ex- 
ceed that  certified  by  the  commissioners  of  stamps  and  taxes. 

20.  That  the  said  commissioners  shall  have  full  power  to  examine  all 
books,  at  all  seasonable  times,  of  such  bankers  as  issue  notes,  and  to  take 
copies  or  extracts  from  any  such  book  or  accounts. 

21.  Each  banker  to  return  his  name,  residence  and  occupation,  or  in 
the  case  of  a  partnership  or  company,  the  name,  residence  and  occupa- 
tion of  every  person  ;  a  copy  of  such  return  to  be  published. 

22.  Each  banker  to  take  out  a  separate  license  for  every  place  at  which 
he  may  issue  notes  or  bills.  Any  banker  having  such  license  in  force  on 
the  6th  of  May,  1844,  for  issuing  notes  at  more  than  four  separate  places, 
shall  not  be  called  on  to  exceed  his  licenses  for  continuing  such  issue  in 
the  places  specified. 

23.  That  on  and  after  the  31st  of  December,  1844,  the  bank  shall  pay 
to  certain  bankers,  agreeing  to  issue  their  notes,  one  per  cent,  on  the 
amount  circulated. 

24.  That  similar  arrangements  may  be  formed  with  other  banks  of 
issue,  provided  the  composition  be  deducted  from  the  amount  payable  by 
the  governor  and  company  to  the  public. 

25.  That  all  the  compositions  payable  to  the  several  banks  which  have 
ceased  to  issue  their  own  notes  under  the  usual  agreement  with  the  gov- 
ernor and  company,  shall  cease  on  the  1st  of  August,  1856. 

26.  That  any  company  of  bankers,  though  exceeding  six  in  number, 
carrying  on   the   business  of  banking  in   London,  or  within  sixty-five 


Meeting  of  the  Proprietors.  279 

miles,  may  draw,  accept  or  endorse  bills  of  exchange,  not  payable  on  de- 
mand. 

27.  That  all  prevous  privileges,  except  such  as  are  abolished  by  the 
act,  shall  remain  in  force,  subject  to  redemption  at  any  time,  upon  twelve 
months'  notice  being  given,  after  the  1st  of  August,  1855,  and  on  repay- 
ment of  all  debts  due  from  the  public. 

The  last  was  an  unusual  feature ;  as,  if  the  existing  government  in 
1855  omitted  to  give  notice  of  an  alteration  in  the  charter,  it  was  at  their 
option  to  do  so  in  the  following  year,  or  at  any  succeeding  period  which 
might  appear  to  render  it  advisable  to  suspend  or  alter  the  privileges  of 
the  corporation. 

It  was  considered  by  some  that  the  privileges  granted  to  the  country 
banks,  by  which  they  might  draw  bills  within  the  sixty-five  mile  limit  at 
less  than  six  months'  date,  might  give  rise  to  a  paper  currency,  differing 
in  form,  but  not  in  principle,  from  promissory  notes,  "  But,"  said  the 
framer  of  the  charter,  very  emphatically,  "  I  give  public  notice  that  if 
the  power  should  be  abused,  if  it  should  be  attempted  to  circulate  small 
bills  so  accepted,  within  the  limits  reserved  to  the  bank,  I  shall  not  hesi- 
tate to  appeal  to  Parliament  on  the  instant,  for  the  purpose  of  correcting 
the  evil."  A  court  of  proprietors  met  to  discuss  the  alterations,  and  the 
letters  which  had  passed  between  the  chancellor  and  the  governor  and 
deputy-governor  were  read.  The  court  was  adjourned  for  a  few  days,  and 
the  proposals  agreed  to  at  the  ensuing  meeting  with  only  three  dissen- 
tients. 

The  two  great  elements  of  this  act  were,  that  the  bank  might  issue 
£11,000,000  on  the  security  of  the  debt  due  from  the  pubUc,  with 
£3,000,000  on  exchequer  bills  and  other  securities  ;  and  that  every  note 
issued  beyond  that  sum  must  have  its  representative  in  an  equal  amount 
of  bullion.  The  measure,  as  at  first  proposed,  met  with  a  few  modifica- 
tions ;  but  the  great  principles  of  the  bill,  which  not  only  restricted  the 
issues  of  the  Bank  of  England,  but  those  of  the  country  banks  also, 
remained  unaltered.  The  objections  to  the  representatives  of  this  class 
were  strong ;  but  no  objections  that  they  could  make  were  equal  to  the 
facts  which  were  developed  in  one  of  the  speeches  of  the  right  honorable 
baronet.  A  simple  announcement  of  the  failures  of  bankers  destroyed 
all  their  assumptions ;  and  every  argument  grew  weak  in  comparison 
with  the  statement  that  from  1839  to  1843,  there  had  been  eighty -three 
bankruptcies,  of  which  twenty-nine  were  banks  of  issue  ;  that  of  these, 
forty-six  had  paid  no  dividend,  twelve  had  paid  less  than  5s.  in  the  pound, 
twelve  had  been  under  10s.,  three  less  than  15s.,  two  under  20s. ;  the 
results  not  yet  being  known  of  seven ;  that  some,  though  insolvent  when 
they  died,  had  left  large  amounts  to  their  relatives  ;  that  others  had  em- 
barked in  wild  speculations,  to  the  ruin  of  themselves  and  their  clients, 
and  that  the  only  assets  of  another  were  race-horses. 

Allusion  has  been  made  to  an  incident  of  great  interest  which  arose 
during  the  proceeding.  When  the  bill  was  first  introduced,  a  general 
impression  was  prevalent  that  the  government  had  reserved  a  right  to 
itself  to  increase  the  amount  of  circulation  on  securities,  above  the  fourteen 
millions  to  which  it  is  ordinarily  limited.     When,  therefore,  the  bill  was 


280  History  of  the  Bank  of  England. 

printed,  and  it  was  seen  tliat  none  of  the  enactments  were  to  this  purpose, 
those  members  of  the  monetary  classes  who  were  in  favor  of  large  issues 
took  the  alarm,  and  at  a  meeting  of  the  banking  interest,  a  letter  was 
framed,  calling  on  Sir  Robert  Peel  to  abide  by  his  word;  and  after 
some  difficulties  and  dissensions  which  are  not  worth  detail,  a  letter  was 
sent  on  the  13th  of  June  to  the  right  honorable  baronet,  stating  that  on 
the  first  announcement  of  the  new  bill,  it  was  proposed,  that  in  the  event 
of  any  particular  crisis,  a  power  should  be  reserved,  with  the  consent  of 
the  government,  of  extending  the  issues  of  the  Bank  of  England  beyond 
fourteen  millions,  and  submitting  that  the  absolute  limitation  of  the  issue 
to  this  amount  would  create  a  feeling  of  uneasiness  throughout  the  coun- 
try.    This  letter  was  signed  by  the  following  firms  : 

EoBARTS,  CuETis  &  Co.,  Spooner,  Attwood  &,  Co.,  Sapte,  Banbuky  &.  Co., 

Hanbury,  Taylor  &,  Llotd,  Currie  &  Co.,  AVeston  &,  Co., 

BosANQUET,  Franks  &,  Co.,  Glyn,  Halifax  <fe  Co.,  Twinings  <fe  Co., 

Brown,  Janson  &  Co.,  Williams  &  Co.,  Dixon  &  Co., 

Barclay,  Bevan  &  Co.,  Fullers  &  Co.,  Coutts  &  Co., 

Hankey  &  Co.,  Barnard,  Dimsdale  &  Co.,  Herries  <fe  Co., 

Smitu,  Payne  <fe  Smiths,  Barnett,  Hoares  &  Co.,  Ransom  &  Co., 

Willis,  Percival  <fe  Co.,  Llbbock,  Forster  &  Co.,  Straiian  <fe  Co., 

Masterman,  Peters  &  Co.,  Stevenson,  Salt  &  Sons,  Scott  tk  Co., 

Rogers,  Olding  <fe  Co.,  Price,  Marryat  &  Co.,  Cockbuun  &  Co. 

Tlie  reply  was  to  the  effect  that  he  would  refuse  any  further  extension 
than  that  already  provided  for  by  the  fifth  clause,  and  denied  that  his 
speech  on  the  first  introduction  of  the  matter  justified  the  opinion  enter- 
tained by  the  applicants. 

It  seems  difficult  to  account  for  the  view  taken  by  these  and  other 
gentlemen  that  Sir  Robert  Peel  originally  intended  to  allow  the  bank 
to  increase  its  issues  in  the  event  of  any  great  monetary  crises.  The 
■whole  tenor  of  the  bill  proved  that  this  would  have  been  incompatible 
with  its  principles.  That  the  idea  was  very  prevalent  there  can  be  no 
doubt.  Mr.  David  Salomons  asked  the  governor  of  the  bank,  at  the 
meeting  of  the  court,  "  Has  the  bank  the  power,  with  the  consent  of 
government,  to  increase  its  issue  ?"  The  answer  was  "  Yes ;  with  the 
consent  of  the  first  lord  of  the  treasury,  the  chancellor  of  the  exchequer 
and  the  master  of  the  mint."  This,  at  first  sight,  may  appear  to  support 
the  opinion  of  the  bankers  ;  but  it  is  strictly  true,  and  it  is  most  probable 
that  the  governor  referred  in  his  reply  to  the  increased  issue  liable  to  a 
change  in  the  circulation  of  the  country  banks.  Mr.,  now  Sir  Charles 
Wood,  in  a  speech  which  charmed  by  its  elegance,  while  it  delighted  by 
its  depth,  stated  that  it  was  one  of  his  most  important  objections  to. the 
charter ;  and  a  great  portion  of  the  monetary  world  begin,  through  the 
mere  force  of  reiteration,  to  believe  that  the  premier  made  a  wilful  alter- 
ation in  his  bill,  while,  during  a  late  financial  crisis,  in  the  memorable 
petition  of  the  bankers,  that  interest  again  acted  on  this  belief. 

The  English  language  could  scarcely  be  more  explicit  than  the  passage 
by  which  the  great  architect  of  the  bank  charter  has  been  judged.  It  is 
novr  given,  that  the  evidence  may  be  fairly  weighed. 

"  I  have  said  that  the  bank  shall  be  restricted  from  issuing  notes  upon 
securities  to  any  greater  extent  than  fourteen  millions.     This  restriction 


Speech  of  Sir  Robert  Peel.  281 

applies,  however,  to  ordinary  circurastances,  and  tlie  present  state  of  the 
affairs  of  the  bank.  The  case  may  occur  in  which  it  would  be  reason- 
able, and,  indeed,  might  be  necessary,  that  there  should  be  an  increase 
of  the  issues  of  the  bank  upon  securities.  Supposing  the  country  circu- 
lation to  amount  to  eight  millions,  and  of  this  amount  two  millions  to  be 
withdrawn,  either  in  consequence  of  the  failure  of  banks,  or  in  conse- 
quence of  agreements  with  the  Bank  of  England  to  issue  Bank  of  Eng- 
land paper ;  in  that  case,  in  order  to  supply  the  void,  it  may  be  neces- 
sary that  the  bank  should  make  an  increased  issue.  A  part  of  this  issue 
may  fairly  be  made  upon  securities.  Our  proposal  is,  that  the  profit  to 
be  derived  from  such  an  issue  shall  be  placed  to  the  account  of  the  gov- 
ernment, and  that  no  increased  issue  upon  securities  shall  take  place 
without  a  communication  from  the  bank  to  government,  and  without  the 
express  sanction  of  three  members  of  government — the  first  lord  of  the 
treasury,  the  chancellor  of  the  exchequer,  and  the  president  of  the  board 
of  trade.  We  do  not  contemplate,  and  do  not  intend  to  provide  for  an 
increased  issue  upon  securities  in  any  other  case  than  that  to  which  I 
have  referred,  namely,  the  supply  of  a  void  caused  by  the  withdrawal  of 
some  considerable  portion  of  the  existing  country  circulation."  There  is 
scarcely  any  necessity  for  comment  on  this.  The  mistake  must  have 
arisen  from  some  one  taking  the  lead  in  the  assertion  ;  and  it  must  have 
been  continued  from  the  indolence  which  prevented  others  from  re-perus- 
ing the  debates.  The  principle  is  laid  down,  the  exceptions  are  named, 
and  then,  that  there  may  be  no  error  or  misunderstanding  on  so  import- 
ant a  point,  those  exceptions  are  reiterated  in  language  which  cannot  be 
more  definite.  "  We  do  not  contemplate,  and  do  not  intend  to  provide 
for  an  increased  issue  upon  securities  in  any  other  case  than  that  to 
which  I  have  referred,  namely,  the  supply  of  a  void  caused  by  the  with- 
drawal of  some  considerable  portion  of  the  existing  circulation."  There 
is  no  circumlocution  in  this,  and  there  can  be  no  doubt  to  a  disinterested 
party ;  but  "  the  wish  is  often  father  to  the  thought,"  and  words  are 
often  looked  at  through  colored  spectacles,  which  only  require  the  clear 
light  of  day  to  interpret  correctly. 

The  nature  of  this  charter  was  approved  by  Mr.  Jones  Lloyd.  His 
evidence  before *the  committee  of  the  House  of  Commons  indicated  that 
which  he  afterwards  wrote  ;  that  the  contraction  of  the  circulation  in 
correspondence  with  the  decrease  of  the  bullion  was  the  only  measure 
which  could  afford  effectual  security  for  stopping  the  drain  of  bullion. 

"  The  Times'''  remarked,  "the  sincerity  of  Mr.  Lloyd's  opinions  can 
admit  of  no  doubt,  since  they  are  at  variance  with  his  own  interest  as  a 
banker,  as  persons  are  not  wanting  who  accuse  him  of  having  betrayed 
his  craft,  and  of  having  assisted  in  handing  over  the  entire  banking  inter- 
est to  the  government,  for  the  purpose  of  creating  ultimately  one  great 
banking  monopoly." 

It  was  the  opinion  of  Mr.  Lloyd  that  to  accede  to  the  petition  would 
be  virtually  to  destroy  the  effect  of  the  measure ;  others  believed  that  it 
would  have  given  a  dangerous  power  to  government,  which  might  have 
been  turned  to  all  sorts  of  abuses ;  and  there  can  be  little  doubt  that  it 
would  have  been  the  first  step  towards  a  government  issue.  But  what- 
ever the  effect,  a  clear  statement  of  the  facts  must  exonerate  Sir  Robert 


282  History  of  the  Bank  of  England. 

Peel  from  the  opinion  of  the  banters,  that  he  ever  contemplated  any  other 
increase  of  issue  than  that  which  might  be  necessary  from  the  failures  or 
■withdrawals  of  the  country  banks ;  and  his  own  language  alike  proves 
their  error,  and  is  his  justification. 

On  the  3d  of  September,  1844,  the  new  arrangements,  by  which  the 
issue  was  separated  from  the  banking  department,  came  into  operation ; 
and  on  the  Cth,  an  announcement  was  issued  that  bills  would  be  dis- 
counted at  two  and  a  half  per  cent,  and  notes  at  three  per  cent.,  such 
bills  and  notes  not  having  more  than  ninety-five  days  to  run.  This, 
which  seemed  like  a  declaration  that  the  directors  of  the  bank,  as  the 
circulation  was  no  longer  under  their  control,  were  disposed  to  enter  into 
competition  with  the  general  discount  market,  caused  many  comments. 
It  was  at  the  time  a  prevalent  feeling  that  the  accountability  of  the  di- 
rectors as  managers  of  the  circulation  was  greatly  reduced,  if  not  destroyed ; 
but  events  wliich  have  since  occurred  prove  that  the  public  are  still  dis- 
posed to  burthen  them  with  the  responsibility,  disregarding  the  fact  that, 
to  a  great  extent,  they  are  deprived  of  both  power  and  profit.  In  No- 
vember of  the  same  year,  the  bank  commenced  charging  a  commission 
on  sums  remitted  to  various  parts  of  the  country  through  the  agency  of 
the  branch  banks. 

The  year  1844  gave  additional  evidence  that  there  is  no  security  against 
fraud.  A  man  named  Joshua  Fletcher  induced  William  Christmas, 
a  clerk  in  the  corporation,  to  give  him  information  from  the  private  books 
of  the  bank.  There  is  no  possibility  of  ascertaining  the  precise  amount 
of  guilt  of  Christmas,  but  it  is  believed,  having  once  been  induced  to 
pass  the  strict  line  of  duty,  that  Fletcher  wrought  upop  his  fears  of  dis- 
covery, and  extracted  from  him  suflicient  information  to  compass  his  de- 
signs. Forgeries  of  wills  to  a  large  amount  were  carried  on  ;  great  sums 
of  money  were  frequently  obtained  ;  and,  though  the  clerk  received  gra- 
tuities in  return,  it  does  not  appear  that  he  was  guilty  of  a  partnership  in 
the  fraud.  The  attorney-general  distinctly  stated  his  belief  that  Christ- 
mas had  not  a  criminal  knowledge,  but  was  chargeable  only  with  having 
given  information  against  the  rules  of  the  bank. 

About  the  year  1815,  a  Mr.  Slack  died,  and  by  his  Avill  appointed  Mr. 
Hulme,  partner  in  the  banking-house  of  Jones,  Llotd  &  Co.,  as  his 
executor.  Among  other  duties  which  arose  from  this  executorship,  Mr. 
Hulme  transferred  £6,600  three  per  cent,  consols,  and  £3,500  three  per 
cent,  reduced,  into  the  name  of  Anne  Slack,  of  Smith-street,  Chelsea, 
daughter  of  the  deceased  Mr.  Slack.  This  lady,justly  reposing  the  most 
unbounded  confidence  in  the  gentleman  chosen  by  her  father  as  his  exec- 
utor, drew  upon  him  for  the  money  she  required,  without  being  aware 
that  the  £3,500,  three  per  cent,  reduced,  had  been  transferred  into  her 
name,  or  that  there  was  any  other  property  due  to  her  than  the  £6,600 
in  the  three  per  cent,  consols.  Mr.  Hulme  acted  as  her  friend  and  as  her 
banker ;  and  Miss  Slack,  happy  in  his  integrity,  was  at  no  trouble  to 
inquire  into  the  particulars  of  her  property. 

On  the  death  of  Mr.  Hulme,  in  ]  832,  this  lady  resolved  to  receive  her 
own  dividends ;  and  knowing  only  of  the  £6,600,  demanded  the  interest 
on  it,  still  leaving  the  £3,500  in  the  possession  of  the  Bank  of  England, 
from  1832  to  1842,  when  the  stock,  with  ten  years'  dividend,  were  both 


Will  Forgeries.  283 

transferred,  by  the  accountant-general,  under  the  act  56  George  III.,  to 
the  commissioners  for  the  reduction  of  the  national  debt.  Had  it  not 
been  for  the  signal  and  successful  fraud  to  be  related,  this  money  would, 
in  all  probability,  have  been  lost  to  its  rightful  owner. 

The  department  of  the  unclaimed  stock  at  the  bank  was  under  the 
management  of  William  Christmas,  a  clerk  in  the  establishment,  who, 
either  weakly  or  wickedly,  gave  information  of  the  transfer  of  this  sum 
by  the  accountant-general  to  his  friend,  Joshua  Fletcher,  originally  in 
the  medical  profession,  but  a  man  of  exceedingly  dark  and  more  than 
doubtful  reputation.  It  immediately  became  the  object  of  Fletcher 
fraudulently  to  secure  this  sum,  by  the  surest  means  and  the  smallest 
amount  of  risk ;  and  after  tracing  Miss  Slack,  with  all  the  craft  of  crime, 
from  Smith-street,  Chelsea,  to  the  house  of  her  brother-in-law.  Captain 
Foskett,  at  Abbott's  Langley,  he  lost  no  time  in  applying  to  Mr.  Bar- 
ber, of  the  reputable  firm  of  Barber  &  Bircham,  attorneys  of  Bridge- 
street,  Blackfriars,  and  a  correspondence  commenced  with  Captain  Fos- 
kett, in  which,  in  October,  1842,  Barber  boasted  of  private  information 
from  the  bank,  and  artfully  procured  the  signature  of  Ann  Slack,  which 
was  handed  by  Fletcher  to  Christmas,  by  whom  a  comparison  was 
made  with  that  lady's  signature  in  the  books  of  the  corporation  ;  and  on 
the  4th  of  June,  1843,  Barber  wrote,  saying,  "As  the  signatures  do  not 
correspond,  we  have  arrived  at  the  conclusion  that  the  identity  cannot 
be  supported."  It  is  noticeable  that  this  Avas  in  direct  opposition  to  the 
opinion  given  by  Christmas,  who  had  stated  the  writings  to  be  similar, 
and  was,  therefore,  an  evidence  that  some  deception  was  about  to  be 
practiced. 

The  next  step  of  the  attorney  was  to  insert  a  notice  in  "  The  Times,^^ 
advertising  for  the  representative  of  Ann  Slack,  formerly  of  Chelsea ; 
but  this,  of  course,  was  ineffectual.  It  is  necessary  to  follow  this  aftair 
closely,  because  it  was  either  a  regular  business  transaction  on  the  part 
of  Mr.  Barber,  or  these  things  prove  that,  under  the  color  of  great  can- 
dor, a  most  artful  fraud  was  being  perpetrated. 

The  next  movement  of  Fletcher  was  to  register  the  name  of  Ann 
Slack,  as  deceased ;  and  on  the  25th  of  February,  1843,  he  went  to  the 
office  and  reported  her  death  as  having  occurred,  at  No.  8  South  Terrace, 
Pimlico.  The  following  step,  in  this  consummate  deception,  was  to 
execute  a  false  will,  to  pass  it  through  Doctor's  Commons,  and  to  lodge 
it  at  the  bank.  This  was  successfully  done  ;  but  this  was  the  immediate 
cause  of  discovery. 

When  the  probate  of  a  will  is  lodged  at  the  bank,  the  stock  specified 
only  is  placed  at  the  command  of  the  executors.  But  should  there  be 
any  other  funds  in  the  name  of  the  deceased  party,  the  word  "  deceased" 
is  placed  against  the  name ;  and  this  prevents  any  unauthorized  person 
from  receiving  the  interest.  By  the  rules  of  the  bank,  also,  no  more 
stock  can  be  added  to  that  which  is  technically  termed  "  a  dead  ac- 
count." 

When  the  probate  of  the  will,  therefore,  was  lodged,  the  word  "  de- 
ceased" was  placed  against  the  account  on  which  Miss  Slack  personally 
received  the  interest,  as  well  as  against  that  which  was  claimed  by  the 
forgers,  and  thus  the  fraud  was  eventually  discovered. 


284  Historrj  of  the  Bank  of  England. 

Prior  to  the  proceedings  enumerated  above,  it  was  necessary  to  provide 
a  fictitious  Emma  Slack  to  pass  as  the  niece  and  executrix  of  Ann  Slack, 
and  this  vv'as  done  in  the  person  of  Lydia  Sanders,  who  occupied  apart- 
ments for  the  occasion  in  Oxford-street. 

The  will  being  forged,  the  probate  lodged,  and  a  representative  pro- 
vided, the  great  difficulties  in  the  way  of  procuring  the  £3,500,  with  the 
additional  ten  years'  interest,  were  surmounted,  and  the  path  became 
comparatively  easy.  Barber  introduced  Lydia  Sanders  to  a  stock- 
broker, who,  on  the  faith  of  the  attorney's  supposed  respectability,  and  as 
an  every-day  occurrence,  identified  her  as  Emma  Slack  ;  and  thus,  the 
money  being  secured,  the  villainy  appeared  successful ;  while,  from  the 
nature  of  the  transaction,  similar  oft'ences  might  have  been  frequently 
perpetrated. 

It  has  been  seen  that  both  the  accounts  of  Miss  Slack  had  the  word 
"  deceased"  placed  against  them  in  the  ledgers  of  the  bank.  When, 
therefore,  her  broker  received  instructions  to  purchase  a  certain  amount 
of  stock  for  her,  he  was  informed,  while  making  the  necessary  inquiries, 
that  Miss  Slack  was  dead,  and  that  no  more  stock  could  be  placed  to 
the  account. 

The  surprise  of  the  broker  was  great,  and  he  immediately  wrote,  in- 
forming his  client  of  her  reported  death.  The  astonishment  of  this  lady 
was  so  great  that  she  instantly  came  to  town,  and  presented  herself  at 
the  bank,  where  the  matter  was  fully  investigated.  On  searching  the 
books  it  was  discovered  that  a  will  had  been  lodged,  purporting  to  be 
signed  by  Ann  Slack,  of  Smith-street,  and  that  £3,500,  with  the  accru- 
ing dividends  of  £1,100,  had  been  paid. 

The  first  thing  to  ascertain  was  the  name  of  the  solicitor  employed, 
and  the  house  of  Barber  &  Bircham  was  brought  to  notice.  When 
Mr.  Barber's  name  was  discovered,  Mr.  Freshfield  called  at  his  office, 
and  told  him  that  the  will  was  a  forgery,  and  that  the  fact  must  be  re- 
ported to  the  treasury.  Barber  replied  that  the  affair  was  quite  regu- 
lar, and  that  Emma  Slack  was  a  most  respectable  woman.  But  the  bank 
solicitor  drew  his  attention  to  the  point,  that  in  1842  he  had  inquired 
for  the  representatives  of  Ann  Slack,  and  that  he  had  proved  the  will  of 
that  person  as  dying  in  February,  1843.  To  this  remark  Barber  gave 
some  hesitating  answer,  and  professed  to  forget  who  had  introduced 
Emma  Slack  to  him. 

From  that  period  Barber  was  closely  and  carefully  watched ;  and 
little  did  he  suppose  that,  to  whatever  part  he  directed  his  steps,  the  acute 
eye  of  Forrester,  the  officer,  was  on  him.  For  three  weeks  his  path  was 
tracked  ;  and  yet  it  is  remarkable,  that  although  the  visit  of  Mn  Fresh- 
field  must  have  aroused  his  alarm,  and  that  a  communication  with 
Fletcher  was  most  natural,  he  attempted  no  interview,  but  went  to  and 
from  his  office  as  customary  ;  and  when  it  was  deemed  advisable  to  ap- 
prehend him,  and  his  papers  were  seized,  all  the  documents  connected, 
with  this  transaction  were  found  among  the  office  papers,  endorsed  "  Re- 
Slack,"  with  no  attempt  at  concealment,  as  if  it  had  been  a  perfectly 
legitimate  business.  The  apprehension  of  Barber  made  the  name  of 
Joshua  Fletcher  known  to  the  bank  solicitor,  as  being  deeply  impli- 
cated in  this  infamous  transaction. 


Will  Forgeries.  285 

When  Barber  was  first  examined  he  called  Fletcher  to  prove  that 
ho  had  only  acted  as  his  attorney.  From  the  witness-box  Fletcher 
passed  to  the  officer,  and  thenceforward  took  his  place  as  an  accom- 
plice. 

1'he  next  person  to  find  was  the  party  who  had  represented  Emma 
Slack  ;  and  after  great  sagacity  on  the  part  of  the  officers,  she  was  dis- 
covered in  one  Lydia  Sanders,  of  Bristol. 

Of  the  money,  so  fraudulently  obtained,  £1,000  was  received  in  a  note 
to  that  amount  by  Lydia  Sanders,  who  publicly  displayed  it  as  a  curi- 
osity in  the  shop  of  her  sister,  Georgina  Dorey,  also  tried  as  an  accom- 
plice. Another  note  was  clrmged  by  Barber  &  Fletcher,  the  former 
of  whom  had  advanced  all  the  requisite  funds,  in  the  shape  of  probate, 
legacy  duty,  stamps,  <fec.,  a  custom  quite  common  among  the  profession. 

The  trial  excited  peculiar  attention.  The  escape  of  Barber,  in  a  for- 
mer case,  had  renewed  his  confidence,  and  he  appeared  certain  of  acquit- 
tal. Of  the  guilt  of  those  parties  who  stood  with  him  at  the  same  bar, 
no  doubt  has  ever  been  entertained.  Nor,  indeed,  when  the  apposite 
remark  of  Mr.  Fiseshfield  concerning  the  date  of  the  forged  will,  and  the 
date  of  Mr.  Barber's  letters  to  Captain  Foskett,  are  remembered,  can  a 
dispassionate  mind  come  to  any  other  conclusion  than  that  William 
Henry  Barber  was  a  knowing  and  fraudulent  accomplice  of  Joshua 
Fletcher,  and  that  the  verdict  which  pronounced  him  guilty  was  justi- 
fied by  evidence,  both  direct  and  collateral.  That  there  were  extraordi- 
nary symptoms  of  an  apparent  innocence,  or  that  great  carelessness  was 
shown,  hardly  compatible  with  so  important  a  transaction,  there  can  be 
no  doubt;  but  the  overwhelming  fact  is  recorded  against  this  plausible 
man,  that  in  1842  he  wrote  to  Captain  Foskett,  of  Ann  Slack  as  then 
dead,  and  that  he  was  a  party  to  the  passing  of  the  will  of  the  same  Ann 
Slack,  as  having  died  in  1843. 

When  their  sentence  was  announced,  he  earnestly  called  on  Fletcher 
to  exonerate  him.  The  latter,  however,  refused ;  and  Barber  entered 
into  a  defence,  the  greatest  part  of  which  attempted  to  prove  that  he  had 
been  deceived  by  Fletcher,  and  that  he  was  entirely  innocent.  The 
following  formed  the  conclusion  :  "  If  I  have  been  negligent,  I  have  al- 
ready sutfered  deeply.  I  solemnly  declare  that  throughout  this  business 
I  have  acted  merely  as  a  solicitor;  and,  as  I  expect  to  answer  for  this 
declaration  in  a  future  world,  again  declare  that  1  am  innocent,  and  that 
I  have  been  deceived  by  Fletcher,  who  had  obtained  my  confidence." 
There  was  a  considerable  difference  of  opinion  at  the  time  in  the  public 
mind ;  the  facts  connected  with  the  case  were  closely  investigated,  the 
conclusion  arrived  at  by  the  legal  authorities  being  that  Barber  was 
guilty,  and  that  it  would  not  be  proper  to  commute  the  punishment 
awarded  in  ordinary  and  less  flagrant  cases. 

In  order  to  obviate  any  future  fraud,  various  precautionary  measures 
have  been  used,  which  render  similar  instances  of  deception  almost  im- 
practicable. It  is  worthy  of  remark  that  the  whole  of  the  loss  occasioned 
by  the  will  forgeries  was  sustained  by  government. 

Prior  to  1846,  two  arrangements,  which  demand  great  praise,  were  en- 
tered into.  By  one,  the  clerks  commenced  a  mutual  guarantee  against 
fraud ;  and  the  securities,  which  had  hitherto  been  necessary,  were  abol- 
19 


286  History  of  the  Bank  of  England. 

ished.  By  the  other,  the  governor  and  court  of  directors  allowed  to  each 
clerk  in  the  establishment  a  period  of  leave  every  year  proportioned  to 
his  service.  This  plan  was  warmly  appreciated  by  those  for  whom  it  was 
thoughtfully  established,  and  will  tend  to  benefit  the  health  of  the  clerks, 
at  the  same  time  that  it  nourishes  a  desire  to  return  the  kindness. 

This  year  the  further  relaxation  in  the  usury  laws,*  by  which  bills  not 
having  twelve  months  to  run  Lad  been  exempted  from  their  operation, 
was  continued  until  1850. 

*  Mr.  BicKLE,  in  liis  " History  of  Civilization,"  a  work  of  acknowledged  ability 
and  originality,  says,  (p.  205  :) 

"  It  would  be  easy  to  push  the  inquiry  still  further,  and  to  show  how  legislators, 
in  every  attempt  they  have  made  to  protect  some  particular  interests,  and  uphold 
Bome  ])articular  princij)les,  have  not  only  failed,  but  have  brought  about  results 
diametrically  opposite  to  those  which  thoy  proposed.  We  have  seen  that  their  laws 
in  favor  of  industry  have  injured  industry  ;  that  their  laws  in  favor  of  religion  have 
increased  hypocris}'^ ;  and  that  their  laws  to  secure  truth  have  increased  perjury. 
Exactly  in  the  same  way  nearly  every  country  lias  taken  steps  to  prevent  usury  and 
keep  down  the  interest  of  money ;  the  invariable  effect  has  been  to  increase  usury 
and  raise  the  interest  of  money.  For  since  no  prohibition,  however  stringent,  can 
destroy  the  natural  relation  between  demand  and  supi)ly,  it  has  followed  that  when 
some  men  want  to  borrow,  and  other  men  want  to  lend,  both  parties  are  sure  to  find 
means  of  cv.iding  a  law  which  interferes  with  their  mutual  rights.  If  the  two  par- 
ties were  left  to  adjust  their  own  bargain,  undisturbed,  the  usury  would  depend  on 
the  circumstances  of  the  loan,  such  as  the  amount  of  securitj'  and  chance  of  repay- 
ment. But  this  natural  arrangement  has  been  complicated  by  the  interference  of 
government.  A  certain  risk  being  always  incurred  by  those  who  disobey  the  law, 
the  usurer,  very  properly,  refuses  to  lend  his  money  unless  he  is  also  compensated 
for  the  danger  he  is  in  from  the  penalty  hanging  over  him.  This  compensation  can 
only  be  made  by  the  borrower,  who  is  obliged  to  pay  what  is  in  reality  a  double 
interest,  one  interest  for  the  natural  risk  on  the  loan,  and  another /rwn  the  extra 
risk  from  the  law.  Such,  then,  is  the  position  in  which  every  European  legislature 
has  placed  itself.  By  enactments  against  usury,  it  has  increased  what  it  wished  to 
destroy  ;  it  has  passed  laws  which  the  imperative  necessities  of  men  compel  them 
to  violate ;  while,  to  wind  up  the  whole,  the  penalty  for  such  violation  falls  on  the 
borrowers  ;  that  is,  on  the  very  class  in  whose  favor  the  legislators  interfere." 

The  history  of  the  world,  the  history  of  commerce — well-known  facts  in  our  own 
local  history — all  confirm  Mr.  Buckle's  positions.  No  more  permanent  good  to  our 
State  could  be  effected  than  that  which  would  follow  a  total  repeal  of  the  usury 
laws.  But  we  would  be  satisfied  if  such  repeal  were  made  to  apply  to  negotiable 
paper  between  individuals.  As  to  corporations,  that  might  be  left  to  await  the  re- 
sults as  to  the  former. 

The  law  of  insurance  applies  here.  Would  we  restrain  the  premium  on  marine  or 
fire  risks,  in  order  to  protect  the  property -holder  ?  Certainly  not.  Is  not  the  pre- 
mium regulated  by  the  hazard,  in  insurance  as  well  as  in  money  ?  Lessen  the  num- 
ber of  lenders,  or  lessen  the  amount  of  lendable  capital,  by  specific  law,  and  the  re- 
mainder is,  of  course,  more  highly  appreciated.  The  mercantile  bill  of  exchange  or 
promissory  note  which  to-day  is  negotiable  at  seven  per  cent,  per  annum,  may,  a 
few  days  hence,  be  worth,  in  the  market,  nothing  under  ten  or  fifteen  per  cent.  Cir- 
cumstances vary  in  each  man's  case,  and  no  law  that  ever  was  made,  or  ever  will  be 
made,  can  effectually  restrain  the  contracts  between  men  as  to  the  rate  of  loans. 


Forgery  of  Burgess.  287 


CHAPTER   XXV. 

FORTUNATE    DISCOVERT FORGERY     OF     BURGESS ESCAPE    TO    AMERICA THE     PURSUIT 

ROMANTIC    EVENTS RAILWAY    MANIA ITS   PROGRESS   AND   DEVELOPMENT. 

An  ingenious  fraud  was  perpetrated  in  1845.  Payment  for  two  stolen 
notes,  of  £500  each,  had  been  stopped;  but,  notwithstanding  this  precau- 
tion, both  were  paid  on  presentation,  one  coming  in  a  few  days  after  the 
other.  When  the  error  was  discovered,  the  carelessness  which  produced 
it  was  severely  blamed  by  the  authorities;  an  inquiry  was  instituted;  the 
clerk  was  examined ;  and  he  could  not  deny  the  initials,  on  the  authority 
of  which  the  notes  were  paid.  Although  the  directors  of  the  bank  are 
not  responsible  for  stopped  notes,  they  decided  that  the  carelessness 
which  could  overlook  the  stoppage  of  them  for  such  large  sums  amounted 
to  culpability,  and  that  the  payer  must  be  responsible  for  the  amount. 
The  excellent  character  of  this  gentleman,  however,  together  with  his 
general  conduct,  raised  a  doubt  in  the  minds  of  the  directors,  and  they 
requested  Mr.  Alfred  Smee  to  analyze  the  ink,  and  see  if  it  were  that 
generally  used  in  the  establishment.  This  gentleman  was  fortunately 
able  to  prove  that  the  initials  on  every  note  passed  on  the  day  of  pay- 
ment were  written  in  bank  ink,  and  that  the  initials  of  the  stolen  notes 
only,  were  in  ink  of  different  ingredients.  The  signatures  were,  in  truth, 
forged,  and  so  excellently  imitated  that  it  was  impossible  to  distinguish 
between  the  true  and  the  false. 

Another  daring  forgery  was  committed  on  the  corporation  in  1844. 
It  was,  however,  so  cleverly  arranged,  that  had  not  peculiar  thought  been 
evinced  by  a  member  of  the  establishment,  discovery  might  have  been 
long  eluded,  and  detection  tenfold  more  difficult.  In  September,  of  that 
year,  William  Burgess,  a  clerk  employed  in  assisting  the  power  of  attor- 
ney office,  obtained  a  brief  leave  of  absence.  On  the  day  of  its  com- 
mencement a  broker  called  at  the  office,  requested  to  see  the  absentee, 
and  expressed  surprise  at  his  being  away,  as  Burgess  had  desired  him 
to  sell  £8,200  from  the  account  of  William  Oxenford.  This  inquiry 
occurred  on  the  Tuesday,  and  on  the  following  Saturday  Burgess  should 
have  returned  to  his  duties,  or  have  sent  a  sufficient  excuse  for  not  doing 
so.  He  did  neither  ;  and  under  such  circumstances  an  inquiry  is  always 
instituted.  Before  any  information  could  be  obtained,  however,  Mr. 
James  Smith,  of  whom  the  broker  had  inquired,  fancying  that  his  absence 
might  be  in  connection  with  the  transaction  alluded  to,  investigated  the 
ledger,  by  which  he  found  that  £8,200  had  been  sold  from  William 
Oxenford's  account ;  looked  to  the  transfer,  and  discovered  that  the 
absentee  had  identified  the  seller ;  examined  the  signature  of  the  present 
sale  with  an  authentic  one  of  William  Oxenford's,  and  saw  that  one 
bore  no  resemblance  to  the  other.  His  suspicions  were  justified  ;  he  in- 
formed the  proper  authorities ;  Mr.  Oxenford  denied  having  sold ;  and 
to  Mr.  James  Smith  the  credit  may  be  fairly  assigned  of  this  early  dis- 
covery of  a  forgery  which  was  alike  remarkable  for  a  breach  of  faith  and 


288  History  of  the  -Bank  of  England. 

a  consummate  contempt  for  tlie  chances  of  detection,  many  of  which  liad 
been  ventured.  Mr.  Oxenkohd  was  known  to  several  clerks  of  the  cor- 
poration ;  the  cliaracter  of  Bukgess  was  not  quite  unsullied;  ajid  the 
man  wlio  personated  the  fundholder  bore  no  likeness  to  him.  When  one 
of  the  gentlemen  to  whom  Burgess  applied  concerning  the  sale  casually 
mentioned  that  he  had  once  known  Mr.  Oxenford,  the  remark  that  "  he 
was  an  old  friend,"  was  the  only  reply ;  and  in  a  short  time,  an  accom- 
plice, afterwards  ascertained  to  be  Joseph  Elder,  a  horse-dealer,  was 
brought  to  personate  Mr.  Oxenford,  without  any  apparent  regard  for 
consequences.  The  receipt  was  witnessed,  the  transfer  effected,  and  a 
check  received  from  the  broker,  with  which  they  proceeded  to  the 
banker,  and  demanded  gold.  On  being  informed  that  if  they  wished 
this,  they  must  apply  to  the  bank,  P'lder  coolly  returned,  requested  and 
procured  gold  to  the  amount  of  £8,000  ;  and  finding  that  he  was  notable 
to  lift  it,  was  assisted  by  two  porters  in  carrying  the  proceeds  of  the  rob- 
bery to  his  accomplice,  who  waited  with  a  cab  outside  the  building. 
They  then  proceeded  to  a  public-house  in  St.  Martin's  Lane,  in  which 
tliey  hired  a  room,  and  transferred  the  gold  to  a  portmanteau. 

As  there  was  little  doubt  that  the  confederates  had  gone  to  America, 
it  was  deemed  necessary  to  send  Forrester,  accompanied  by  some  one 
who  could  identify  Burgess  ;  and  Mr.  Bord,  a  member  of  the  depart- 
ment in  which  the  forgery  had  been  committed,  was  chosen  for  the  im- 
portant task.  After  great  ditHculty  the  defrauders  were  tracked  to  Liver- 
pool ;  from  Liverpool  they  were  traced  to  Boston,  in  America,  where 
Forrester  and  his  companion  became  satisfied  that  they  were  on  the 
riglit  path,  but  that  the  culprits  had  proceeded  westward.  It  appears 
probable  that  Elder  and  Burgess  were  ignorant  of  the  international 
league,  known  as  the  Ashburton  treaty,  as,  directly  they  were  on  the 
American  soil,  they  began  to  enjoy  themselves;  and,  after  investing  their 
money  in  the  Merchants'  Bank,  they  proceeded  to  Buffalo,  made  a  tour 
to  the  falls  of  Niagara,  paid  a  flying  visit  to  Canada,  returning  by  a  new 
route  to  Boston,  where  Burgess  commenced  building  a  residence,  and 
became  noted  "for  a  peculiar  partiality  for  raisius  soaked  in  burning 
champagne,  and  other  high  notions,  a  taste  for  which  he  probably  ac- 
quired," said  the  Boston  paper  very  innocently,  "  while  he  held  the  hon- 
orable post  of  clerk  in  the  Bank  of  England." 

From  Boston  the  seekers  went  to  Niagara,  imagining  but  little  that  at 
the  time  of  their  arrival  in  Boston  tlie  fugitives  were  both  there,  and 
probably  in  one  of  the  very  hotels  at  wliich  inquiry  was  made.  Their 
visit  westward,  therefore,  only  produced  a  view  of  the  fine  cataract  of 
Niagara.  They  then  returned  to  Boston,  where,  by  this  time.  Burgess 
and  Elder,  who  called  themselves  uncle  and  nephew,  and  passed  by  the 
name  of  Ellis,  had  attracted  a  certain  degree  of  notoriety,  and  had  ob- 
tained introduction  to  certain  Americans  of  distinction,  who  were  proba- 
bly pleased  by  Burgess'  aristocratic  taste  for  raisins  and  champagne. 
Under  these  circumstances  it  was  soon  ascertained  that  Elder  was  resid- 
ing at  a  boarding-house,  to  which  Mr.  Bord  w^ent,  accompanied  by  the 
police.  On  being  informed  that  the  culprit  was  out,  they  requested  per- 
mission to  wait,  and  in  a  short  time  Joseph  Elder  entered  the  house, 
£ame  unsuspectingly  up  stairs,  and  was  at  once  pointed  out  to  the  officers 


Apprehension  of  Burgess — Railway  Speculation.  289 

as  the  personator  of  William  Oxenford.  He  was  immediately  conveyed 
to  prison  ;  and  the  next  morning  it  was  discovered  that  he  had  added  to 
his  previous  crimes  that  of  suicide. 

The  apprehension  of  Burgess  was  not  quite  so  easy.  From  the  hotel 
at  Nahant,  where  he  was  residing,  he  must  have  seen  the  police  approach, 
as  he  made  his  escape  through  the  lower  part  of  the  house ;  and,  without 
a  hat ;  he  then  went  to  a  Mr.  Tarbox,  in  the  neighborhood,  made  some 
excuse  for  his  unexpected  and  halless  appearance,  requested  him  to  pro- 
cure his  money  and  portmanteau  from  the  hotel,  and  to  bring  them  to 
him  in  a  neighboring  field.  The  commission  was  only  partially  success- 
ful, as  the  officers,  while  searching  every  nook  and  corner  of  the  neigh- 
boring rocks,  came  across  Mr.  Tarbox  with  his  booty,  and  compelled  him 
to  yield  it  to  the  authorities. 

Not  finding  Mr.  Tarbox  at  the  place  appointed.  Burgess  immediately 
went  away,  as  he  probably  knew,  to  use  the  characteristic  phrase  of  an 
American  paper,  that  *'  the  hounds  of  the  law  were  after  him."  Every 
arrangement  was  made  to  secure  his  detection  in  the  morning,  and  the 
events  which  marked  his  temporary  escape  were  remarkable  almost  to 
romance.  The  officers  were  frequently  near  him  ;  he  fell  into  a  pig-pen ; 
tumbled  into  the  water ;  sunk  into  the  sand  on  the  beach  ;  was  on  one 
side  of  a  large  rock,  and  heard  the  conversation  of  the  officers  as  they 
passed  on  the  other ;  was  at  last  successful  in  detaching  a  boat  from  the 
steam  wharf,  and,  after  being  tossed  about  on  the  waves  for  six  hours, 
throwing  away  the  oars  in  despair,  and  yielding  up  all  hopes  of  escape,- 
succeeded  in  landing  on  Light-House  Island,  where  he  took  refuge  in  the 
cottage  of  an  Irishman,  who,  for  300  dollars,  informed  the  police  of  his 
"whereabout."  His  interview  with  Forrester,  when  he  gave  himself 
up,  was  characteristic  of  the  same  contempt  for  consequences  which 
marked  the  beginning  and  end  of  the  transaction  ;  and  when,  a  short 
time  afterwards,  he  was  brought  to  England,  and  tried  for  his  unprinci- 
pled breach  of  trust,  his  self-possession  could  scarcely  be  said  to  have 
forsaken  him. 

The  greater  part  of  the  money,  upwards  of  £7,000,  was  obtained  from 
various  sources.  Mr.  Bord  and  his  companion  had  evinced  great  tact; 
and  the  only  result  which  occurred  was  in  an  order  which  prevented  all 
clerks,  excepting  only  principals  and  deputy-principals,  from  identifying, 
in  the  disgrace  which  stigmatized  the  culprit,  in  the  misery  he  caused 
Lis  friends,  and  in  the  general  distrust  which  such  transactions  ever  en- 
tail on  the  class  to  which  the  offender  belongs.  Whether  it  be  a  bank 
clerk,  or  whether  it  be  a  banker,  whether  it  be  a  Rowland  Stephenson, 
or  whether  it  be  a  William  Burgkss,  the  effect  upon  the  great  and  un- 
thinking mass  of  society  is  evil  and  mischievous. 

The  history  of  the  railway  mania  of  1845  is  not  the  least  remarkable 
among  those  delusions  which,  from  time  to  time,  arise  to  throw  aside 
legitimate  trade  and  paralyze  national  commerce.  From  1842  discounts 
had  been  easy  and  money  plentiful.  The  funds  maintained  a  high  rate ; 
low  interest  only  could  be  obtained.  In  1844  it  was  remarked  that  there 
had  been  a  longer  continuance  of  a  plentiful  supply  of  money  than  had 
occurred  in  the  memory  of  the  oldest  capitalist.  A  desire  to  speculate 
grew  out  of  these  circumstances.     Unlike  most  periods,  when  this  desire 


290  History  of  the  Bank  of  England. 

has  been  spread  over  many  objects,  it  was  concentrated  on  railways  and 
railway  schemes  ;  and  England  was  seized  with  her  ancient  frenzy.  For 
some  time  it  was  legitimate,  and  confined  within  its  proper  boundary ; 
but  the  desire  spread  ;  the  contagion  passed  to  all ;  and,  from  the  clerk 
to  the  capitalist,  the  fever  reigned,  uncontrollable  and  uncontrolled. 
Some  portion  of  the  press  aided  the  mania.  The  subject  was  a  capable 
one,  and  leading  articles  trumpeted  the  growing  greatness  of  the  train. 

"  Railways  are  the  triumph  of  a  period  of  peace.  They  arc  the 
emblems  of  internal  confidence  and  prosperity.  They  arc  the  pro- 
phetic announcements  of  an  open-eyed  people  to  their  neighbors,  that 
they  will  not  again  waste  their  dearest  action  on  the  tented  field,  but  ex- 
hibit and  exert  it  in  the  mightier  works  of  commerce."  The  power  of 
steam,  the  humanizing  infiuence  of  a  close  connection  between  the  re- 
finements of  the  city  and  the  requirements  of  the  hamlet,  were  all  elo- 
quently announced.  London  was  to  receive  the  superfluities  of  the  vil- 
lage ;  the  village  was  to  be  gladdened  with  the  civilization  of  London. 
Railways  were  to  cover  the  length  and  breadth  of  the  land,  and  their 
complete  development  was  only  a  question  of  time  ;  they  were  the  ad- 
vent of  all  that  was  desirable.  "  Do  the  people  want  present  employ  ? 
Railways  give  it  to  hundreds  of  thousands  at  this  moment.  Is  it  desir- 
able that  the  artisan  or  mere  laborer  should  at  all  times  be  able  to  trans- 
fer his  skill  or  his  strength  to  the  place  where  he  can  most  profitably 
employ  either  ?  Railways  give  the  power  to  do  so.  Is  it  desirable  that 
prices  should  be  equalized  generally  through  the  country  ?  Railways 
are  the  great  levellers  in  this  respect,  bringing,  as  it  were,  the  producer 
and  the  consumer  into  immediate  contact.  Are  wastes  to  be  reclaimed 
by  labor  and  manure,  in  places  where  neither  can  be  found  ?  Railways 
will  carry  both  to  the  spot.  By  railways  the  whole  country  may  be,  and, 
under  the  blessing  of  Divine  Providence,  will  be  cultivated  as  a  garden." 

Invasion  was  no  more  to  be  feared,  for  every  village  would  have  its 
line,  and  the  bold  yeomanry  of  England  would  be  carried  to  any  place, 
and  in  scarcely  any  time,  long  before  their  aid  could  be  required.  The 
money  would  be  spent  in  England,  and,  unlike  the  mining  speculations, 
which  carried  it  into  distant  parts,  it  would  nourish  the  English  popula- 
tion. Labor  would  be  abundant.  Wages  would  be  plentiful.  Trade 
would  flourish  by  the  circulation  of  capital,  and  the  prosperity  of  the 
country  be  carried  to  an  unimaginable  extent.  The  railways  were  like 
"  the  bridge  of  gold  which  the  generous  Greek  would  have  built  to  aid 
the  escape  of  a  flying  enemy  ;  ihey  were  the  links  which  bring  and 
bind  friends  together."  They  were  to  remain  safe  in  the  midst  of  panic  ; 
and  though  "  times  of  pressure — severe,  hazardous,  ruinous  pressure — have 
been  felt  in  this  country,  and,  nnfortunately,  must  be  expected  to  be 
felt  again,  yet,  when  such  a  time  of  apprehension  shall  arrive,  it  will  only 
prove  them  to  be  part  and  parcel  of  the  genuine  sources  of  wealth  and 
avenues  for  labor  in  which  this  country  lives,  and  moves,  and  has  its  being. 

The  directors  of  the  railways  were  formed  of  all  classes,  and  all  condi- 
tions. Long  lists  of  provisional  committee-men,  with  their  residences 
and  professions,  were  paraded  in  papers.  The  journals  were  increased  in 
size  to  contain  the  numerous  advertisements.  The  heat  of  India  was  no 
objection.     The  cold  of  Canada  no  preventive.     Men  who  bad  mingled 


Promises  0/  Prospectuses.  291 

in  the  bubbles  of  1825;  men  who  were  known  and  recognised  as 
adventurous  swindlers,  but  who  had  disappeared  when  no  money  was 
to  be  obtained,  re-appeared,  to  exercise  their  customary  vocation.  The 
environs  of  the  stock  exchange  were  crowded.  The  countess  came  down 
in  her  carriage,  and  hovered  in  a  state  of  excitement  round  the  doors  of 
her  broker.  Grave  and  sober  men  dabbled  in  scrip.  The  literary  man 
and  the  artist  risked  their  well-earned  money  to  procure  a  share  of  the 
profits.  The  youth  of  the  empire  sought  to  gratify  expensive  habits. 
The  old  man  sought  to  indulge  his  avarice.  The  clergyman  traded  in 
"  undeniable  securities."  The  physician  murmured  of  the  broad  and  nar- 
row gauge.  The  lawyer  forsook  his  fee  ;  the  lady  jeopardized  her  soft 
and  gentle  influences ;  the  matron  forgot  her  children,  and  the  maiden 
her  embroidery,  in  one  universal  pursuit.  The  railways  formed  the  cur- 
rent theme  of  the  time.  Premiums  and  discounts  were  the  topics  of  the 
day,  and  every  thing  wore  the  same  smiling  appearance  which,  in  1823, 
had  lured  the  people  to  destruction,  and,  as  then,  almost  every  thing 
came  out  at  a  profit.  If  they  went  to  a  discount,  the  company  was 
abandoned,  the  whole  of  the  expenses  deducted  from  the  few  deposits 
which  were  paid,  the  directors  liberally  rewarded,  and  the  small  remain- 
ing dividend  returned.  The  names  of  the  clergy  on  the  lists  of  directors 
produced  an  opinion  from  the  Bishop  of  Exeter,  that  for  a  clergyman  to 
speculate  in  railways  came  under  the  denomination  of  "  dealing  for  gain 
or  profit,"  and  this  was  against  the  statute.  "  As  the  statute  only  men- 
tions dealing,"  remarked  a  cotcmporary,  "  and  railway  speculation  involves 
shuffling,  some  of  the  reverend  gentlemen  maintain  that  they  do  not 
violate  the  act  of  Parliament." 

The  following  is  undoubtedly  a  faithful  picture  of  the  way  in  which 
many  railways  were  established  : 

"  A  young  gentleman  need  only  look  to  a  half-crown  railway  map,  and 
search  for  a  district  tolerably  clear  of  the  rail.  Taking  two  of  the  towns 
that  form  that  open  space,  he  draws  a  diagonal  with  his  pencil,  and  thus 
creates  a  direct  line.  lie  then  writes  down  the  name  of  the  company, 
his  own  name  as  "  promoter,"  either  alone,  or  with  the  names  of  as  many 
friends  as  he  can  venture  to  take  that  liberty  with,  or  with  any  names, 
real  or  fictitious ;  his  own  occupation,  whether  gentleman  or  esquire,  en- 
gineer, artist  or  solicitor,  or  clerk,  or  perfumer,  or  tailor,  or  M.  A.,  or 
M.  D.,  dissenting  minister,  his  place  of  business,  if  he  has  one  ;  his  place 
of  residence,  whether  it  be  castle  or  hall,  or  in  Berkley  Square,  or  rooms 
in  Gray's  Inn,  or  lodgings  in  the  Borough.  In  the  course  of  his  walk  to 
the  office  in  Serjeant's  Inn,  he  may,  if  he  pleases,  remodel  his  company, 
changing  every  name  in  it,  whether  of  place  or  person,  including  himself. 
Arrived  at  the  office,  he  invests  a  few  sovereigns,  begged,  borrowed,  or 
stolen,  in  fees,  and  enters  his  company.  Advertisements  and  letters  of 
allotment  do  the  rest.  It  may,  for  any  thing  the  registrar  knows  or  cares, 
be  straight  across  a  mountain  a  mile  high,  or  straight  across  the  arm  of  a 
sea  ten  miles  broad.  It  would  be  his  duty  to  register  a  tunnel  under  the 
Atlantic,  and  we  are  not  quite  sure  that  he  would  have  the  option  of  re- 
fusing a  rail-road  to  Jupiter,  with  extension  to  the  other  planets,  and  a 
fihort  branch  to  the  moon." 

The  prospectus  was  sure  to  promise  all  the  advantages  of  all  the  world, 


292  History  of  the  Bank  of  England. 

perhaps  to  some  small  village  which  had  hitherto  been  unable  to  support 
a  coach  once  a  week.  The  name  of  a  local  person  of  influence  was 
obtained  ;  a  meeting  was  called  at  the  village  inn  ;  speeches  were  uttered, 
which  discoursed  most  eloquent  music  in  the  ears  of  the  villagers,  for 
their  property  was  to  be  improved,  and  their  importance  doubled.  Pro- 
positions were  carried  that  a  railway  was  necessary  ;  the  speeches 
appeared  in  the  local  journals,  were  advertised  in  the  London  papers; 
ten  times  the  number  of  shares  were  applied  for  which  were  issued  ;  and 
when  they  arrived  at  a  premium,  the  promoters,  secretaries  and  directors 
seized  the  g<lden  opportunity,  and  the  public  came  off  second  best.  The 
socializing  influences  of  the  railway  were  descanted  on.  Directors 
dreamed  of  premiums,  patronage  and  pay.  Men  who  were  known  to 
have  been  penniless  a  year  before,  suddenly  kept  their  broughams  or 
started  barouches.  Valuable  diamonds  gleamed  from  fingers  which  had 
hitherto  been  guiltless  of  the  bright  adornment.  Railway  papers  and 
railway  pantaloons,  railway  tics  and  railway  tricks,  abounded.  It  was  a 
railway  madness.  London  was  to  be  tunnelled  that  the  train  might  run 
beneath  her  mighty  heart;  colonnades  were  to  be  formed  in  the  air  that 
the  engine  might  pass  over  the  path  of  the  pedestrian  ;  and  the  Surrey 
Zoological  garden  was  to  have  a  direct  line.  The  time  for  other  vehicles 
had  gone  ;  a  new  epoch  had  arrived  ;  and  iron  roads  were  to  intersect 
the  great  city,  to  pass  through  the  fruitful  orchard,  and  to  destroy 
the  fertile  field.  The  sanctities  of  the  poet  of  the  lakes  were  to  be  invaded, 
and  the  haunts  of  nature  were  to  resound  with  the  hiss  of  steam  and 
the  rush  of  carriages.  The  weekly  exponent  of  the  follies  of  the  times, 
which,  beneath  an  exuberant  fancy,  veils  a  deep  philosophy,  suggested 
that  there  should  be  one  great  terminus  for  all  the  companies,  and 
that  that  terminus  should  be  a  hinatic  asylum.  The  system  was  fruit- 
ful ;  and  every  one  said  there  was  no  risk.  When  shares  were  de- 
manded of  a  company,  and  they  only  came  out  at  par,  the  letter  of  allot- 
ment was  put  into  the  fire;  if  they  arrived  at  a  premium  they  were  sold. 
Men  without  a  shilling  wrote  for  hundreds  of  shares.  Journeymen  me- 
chanics styled  themselves  esquires,  and  signed  deeds  for  thousands.  The 
names  of  men  well  known  in  the  city  as  swindlers,  whose  notorious 
character  had  banished  them  from  the  society  of  all  good  men,  suddenly 
re-appeared  on  the  lists  of  the  proprietors  and  directors,  their  names 
graced  by  the  cheap  esquire,  and  their  residences  given  in  some  far  dis- 
tant county. 

Many  of  the  prospectuses  rivaled  those  of  previous  periods  in  grandilo- 
quence. The  lines  were  often  recommended,  not  so  much  on  account  of 
their  financial  prospects,  as  they  were  for  historical  associations.  One 
was  "  connecteil  with  the  remarkable  fact,  that,  in  the  reign  of  Alfred 
the  Great,  the  vicinity  was  the  seat  of  an  actual  invasion  by  the  Danes 
under  Hubba  ;"  while  another  gave  a  history  of  the  battle  of  Hastings, 
and  invited  the  public  to  subscribe,  for  a  reason  which  was  only  interest- 
ing from  its  connection  with  a  period  when  railways  were  unknown. 

Tlie  following  is  a  further  illustration  of  the  schemes  :  "  A  flattering 
prospectus  is  issued,  promising  ten  per  cent.,  and  perfect  prosperity. 
Some  secret  agent  of  the  directors  is  on  the  stock  exchange,  pufling  up 
the  shares.     A  price  is  named ;  it  is  eagerly  accepted  by  him ;  the  bar- 


New  Companiea.  293 

gain  is  made  ;  and  the  price  of  the  scrip  established.  The  accents  con- 
tinue to  buy;  the  jobbers,  calculating  on  plenty  of  scrip  being  in  the 
market,  are  wiliini;  to  sell  on  the  liberal  terms  which  the  agent  pays; 
and  they  enter  into  engagements  to  deliver  a  large  quantity  of  scrip. 
When  a  sufficient  number  of  shares  are  sold  to  satisfy  the  grasping  ava- 
rice of  the  directors,  they  profess  to  consider  the  applications  ;  and  it  is 
announced  that  no  more  letters  will  be  received,  and  that  letters  of  ^dlot- 
raent  liave  been  forwarded  to  the  fortunate  applicants,  taking  care,  liow- 
ever,  not  to  issue  a  tenth  part  of  the  number  previously  sold  in  the  mar- 
ket. The  letters  applying  for  shares  are  burnt  by  bushels,  without  even 
the  trouble  of  opening  them  ;  and  those  who  have  sold  at  £o  a  share 
cannot  even  buy  at  £10  or  £15,  if  the  consciences  of  the  directors  are 
sufficiently  elastic  to  allow  of  so  enormous  a  robbery."  This  madness 
seized  upon  the  peerage,  both  at  home  and  abroad.  "  Prince  de  Join- 
ville  mounted  a  tender;  Lord  F.  Egerton  sought  to  make  a  railway  all 
by  himself;  Earl  Lonsdale  bought  one;  Lord  Belhaven  condescended 
to  speak  at  meetings;  Lord  Worsley  even  took  the  chair;  the  Marquis 
of  Ormonde  trundled  a  wheelbarrovv  in  the  presence  of  his  admiring 
peasantry  ;  and  Lord  Wharncliffe,  '  high  in  the  councils  of  her  majes- 
ty,' cut  turf  on  correct  geometrical  principles." 

Every  one  talked  of  making  large  fortunes,  and  very  few  realized  them. 
Each  day  witnessed  the  advent  of  some  new  companies ;  and  ten  times 
the  quantity  of  shai'es  were  applied  for  than  were  to  be  issued.  During 
the  greater  part  of  1845,*  it  is  almost  impossible  to  imagine  the  constant 
and  exciting  fever  which  was  around.  The  absorption  of  scrip  was  aston- 
ishing. It  was  understood  that  a  certain  amount  of  responsibility  rested 
on  the  signer  of  the  deeds,  and  some,  therefore,  preferred  to  purchase  in 
the  market  at  a  small  premium.  The  desire  of  gambling  was  thus 
spread  ;  and  those  who  at  one  time  only  thought  of  paying  a  small  pre- 
mium, and  buying  a  small  number,  were  led  on  by  tiiis  terrible  spirit  to 
gamble  far  beyond  their  means.  In  many  instances  shares  were  pur- 
chased as  investments,  which  would,  in  all  probability,  pay  less  than  the 
interest  receivable  in  the  funds. 

The  tricks  of  the  speculators  were  as  frequent  as  ever.  The  daring 
genius,  which,  in  1825,  had  projected  a  mining  company  in  the  far  west 
— which,  in  1836,  would  skim  the  Dead  Sea,  or  bore  the  Swiss  moun- 
tains, for  asphalte,  was  equally  ready,  in  1845,  to  project  railways  for  the 
prevailing  fancy.  There  was  no  possibility  of  providing  for  the  responsi- 
bility of  applicants  for  allotments.     In  vain  the  directors  announced  that 

*  The  following  were  the  lowest  and  highest  quotations  of  bank  shares  and  Con- 
sols, bank  dividends,  circulation  and  bullion,  from  1841  to  1846 : 

Consols. 

Bank  Stock.  Bank  , ' ^ 

* BniJc  , ' >  Low-     High- 
Lowest.  Highest.  Dividend.        Circulation.            Bullion.  est.         est. 

1841 157  173  ..  7  ..  £16,537,000  £4,839,000  ..  87^-  90^ 

1842 165  173  ..  7  ..  16,952,000  6,125,000  ..  88^  95| 

1843 172  185  ..  7  ..  20,093,000  11,054,000  ..  92^^  97^ 

1844 185  211  ,.  7  ..  21,122,000  15,784,000  ..  96  j  101^ 

1845, 199  215  ..  7  ..  21,038,000  16,613,000  ..  911  lOOf 

1846, 199  211  ..  7  ..  21,311,000  16,366,000  ..  93^  97| 


294  Hislory  of  the  Bank  of  England. 

no  applications  would  be  received  without  a  respectable  reference.  Re- 
spectable references  were  easy,  and  the  first  nobility  of  the  nation  were 
appealed  to  by  men  without  a  shilling.  They  were  also  so  numerous 
that  it  was  impossible  to  ascertain  their  authenticity.  Private  property 
was  invaded,  and  private  gardens  were  measured,  with  all  the  impudence 
of  the  craft.  Gentlemen  who  had  lived  the  best  part  of  the  century  in 
their  ancestral  mansions,  were  threatened  with  the  destruction  of  build- 
ings, every  nook  of  which  was  endeared  by  some  old  reminiscence. 
Fancies  and  feelings  were  alike  disregarded  ;  it  was  the  age  of  iron. 

Grave  divines  uttered  after-dinner  speeches,  which  were  applauded  to 
the  echo,  and  reported  in  the  newspapers,  until  people  began  to  think 
they  were  only  doing  their  duty  in  subscribing.  "  From  London  to  Ed- 
inburgh," said  one,  "from  St.  Petersburgh  to  Moscow,  from  Brussels  to 
Cologne,  the  railway  is  spreading,  carrying  civilization  and  Christianity 
in  its  train,  and  making  all  the  people  in  the  world  as  one  united  fami- 
ly." The  newspapers  realized  fortunes  by  the  advertisements.  Half  a 
dozen  competing  rail-roads  were  announced  to  go  over  the  same  ground ; 
and,  though  only  one  could  obtain  success,  they  were  all  at  a  premium. 
The  same  person  Avas  director  of  thirty  difterent  railways,  under  various 
descriptions.  The  rumor  of  the  amalgamation  of  a  projected  with  an  es- 
tablished line  sent  the  former  up  to  an  increased  premium ;  while  the  re- 
port that  the  "  railway  king"  was  negotiating  with  an  embryo  company, 
added  enormously  to  the  value  of  its  shares.  In  one,  called  the  Great 
Western  of  Canada,  which  was  issued  at  £3  10s.  premium,  it  was  stated 
that  out  of  this  only  £l  15s.  could  be  returned,  as  ten  thousand  shares 
liad  been  divided  among  the  stock  exchange,  for  the  purpose  of  interest- 
ing the  members.  "  In  schemes,"  said  the  "  Chronicle,^''  "  where  as  many 
as  30,000  shares  have  been  advertised,  not  more  than  15,000  have  been 
allotted  to  the  public ;  the  remainder  being  reserved,  part  of  them  for 
property  on  the  line,  part  for  the  provisional  committee  and  officers.  In 
this  way  a  scarcity  of  scrip  was  created,  and  the  shares  rose  to  a  premi- 
um. When  the  price  was  thus  forced  up  to  a  point  supposed  to  be 
worth  realizing,  the  reserved  shares  were  sold,  and  the  proceeds  divided 
among  the  committee."  In  one  case  three  millions  of  shares  were  ap- 
plied for,  where  not  one  hundred  thousand  could  be  allotted. 

Until  the  middle  of  October,  1845,*  the  excitement  continued,  and 

*  The  leading  events  of  a  commercial  or  financial  character  between  the  years 
1841  and  1845  were  the  following: 

1841. — Lord  Ashburton  announced  as  special  commissioner  to  the  United  States, 
January.  The  island  and  harbor  of  Hong  Kong  ceded  (1841)  by  the  Chinese  to 
England.  Pennsylvania  United  States  Bank  failed,  third  time,  5th  February,  and 
made  an  assignment,  4th  September.  Union  of  Upper  and  Lower  Canada,  10th 
February.  Foreign  trade  of  Canton  suspended,  and  hostilities  with  the  English  re- 
newed, 21st  May.  Canton  taken,  27th:  ransomed.  May  31st,  for  6,000,000  dollars. 
American  clocks  exported  to  England.  Peel  cabinet  formed,  September.  Loss  of 
the  British  steamship  President.  British  steam  expedition  up  the  Niger  river. 
Repeal  of  the  sub-treasury  act,  August  9th.  General  bankrupt  law  passed  in  Con- 
gress, August  18th.  1842. — Anti-corn-law  movement  in  Parliament  by  Sir  R.  Peel. 
Captain  Wilkes  returned  from  his  exploring  expedition,  11th  June.  Shanghai 
taken,  July  19.  Ashburton  treaty  ratified  by  the  Senate,  20th  August.  British 
treaty  with  China,  (29th  August,)  by  which  it  was  agreed  to  open  five  free  ports. 


The  Delirium  of  the  Nation.  295 

the  city  article  of  "  The  Times'''  reported  that  the  share  market  was 
good,  with  a  large  extent  of  business.  The  course  of  that  paper  during 
the  fear  and  fright  which  followed  will  be  faithfully  pursued,  because 
there  can  be  little  doubt  that  the  panic  was  greatly  hastened,  if  not  abso- 
lutely caused,  by  its  earnestness  of  purpose.  Its  leading  articles  were 
like  a  succession  of  hand-grenades  thrown  into  a  camp  during  a  trium- 
phal feast.  The  nation  was  still  in  its  delirium  ;  they  projected  without 
counting  the  cost ;  they  laughed  at  warning,  and  defied  opposition.  On 
Tuesday,  the  14th  of  October,  1845,  a  leading  article  appeared  which, 
after  calculating  the  income  and  the  accumulations  of  the  country,  en- 
tered calmly  but  closely  into  the  investigation  of  railway  schemes,  and 
concluded  by  demanding,  "  Whence,  then,  are  the  hands  to  come  for  the 
rail-roads  already  authorized,  staked  out,  and  contracted  for  ?"  "  As  for 
the  nine  or  ten  thousands  of  miles  of  new  projects,  the  three  or  four  hun- 
dreds of  millions  they  demand,  and  the  whole  population  of  skilled  and 
unskilled  Englishmen  they  would  require,  they  are  at  present  no  more 
than  a  dream,  the  greater  part  of  which  must  vanish  into  thin  air  long 
before  they  can  become  the  sport  of  counsel  and  the  victims  of  commit- 
tees. In  vain  their  long  lists  of  directors,  in  vain  the  mutual  support 
which  men  of  straw,  in  every  age,  have  been  so  ready  to  aflford.  Could 
we  find  in  the  pompous  catalogues  which  adorn  the  columns  of  the  pub- 
lic press,  any  good  show  of  substantial  names,  we  might  at  least  distrust 
our  own  anticipations."  "  It  is  the  simpler  part  of  the  public  which  is 
deceived  ;  and,  at  the  risk  of  oflfence,  we  think  it  our  duty  to  take  what 
steps  we  can  to  warn  them  of  the  day  when  the  bubbles  must  burst  and 
collapse."  On  the  following  day  the  directors  and  provisional  commit- 
tee-men were  warned  of  their  responsibility,  and  the  bold  assertion  made 
that  "  many  of  the  schemes  were  based  on  fraud."  The  public  began  to 
wonder,  and  men  looked  anxiously  about  them.  Money  grew  scarce, 
and  thirty  and  forty  per  cent,  was  offered,  on  the  security  of  scrip,  but 
refused.  The  appearance  was  ominous.  On  Thursday,  the  17th  of  Oc- 
tober, 1845,  a  notice  was  issued  by  the  bank  that  the  minimum  rate  of 
interest  would  be  three  per  cent.,  and  this  advance  caused  general  satis- 
Royal  Exchange  commenced  by  Prince  Albert,  January  I7tli.  Edinburgh  and 
Glasgow  Railway  opened,  February.  Great  fire  at  Hamburgh,  three  days.  Cro- 
ton  Aqueduct,  New-York,  completed.  1843. — Return  of  Captain  Ross  from  the 
South  Pole,  6th  September.  Treaty  of  commerce,  by  Sir  H.  Pottinger,  with  China. 
Canton  opened  to  the  English,  July  27th.  Natal  annexed  to  Cape  of  Good 
Hope  colony.  Thames  Tunnel  opened  for  travel.  British  packet  mail  station 
changed  from  Falmouth  to  Southampton.  Half-farthings  first  coined.  1844. — Rob- 
bery of  Rogers  &  Co.,  bankers,  London — £40,710.  Treaty  of  annexation  of  Texas 
to  the  United  States  rejected  by  the  United  States  Senate,  8th  June.  Anti-rent 
riots  in  New-York,  August.  Re-charter  of  Bank  of  England.  Magnetic  telegraph 
between  Baltimore  and  Washington,  July  1.  Cheap  postage  act  of  United  .-tates 
went  into  operation,  1845. — Treaty  between  United  States  and  China  ratified  by 
United  States  Senate,  16th  January.  Sir  John  Franklin  left  England,  25th  May, 
on  his  Arctic  expedition.  Anti-corn-law  league  at  Manchester.  Steam-ship  Great 
Britain  arrived  at  New- York,  10th  August.  Treaty  of  annexation  of  Texas  ratified 
by  the  United  States  Senate,  1st  March.  Loss  of  $6,000,000  by  fire  in  New- York 
city,  19th  July.  Great  fires  in  Quebec,  May  28th,  and  June  28th.  Peel  ministry 
resigned,  1 1th  December,  Failure  of  the  potato  crop  in  Ireland,  and  for  three  yeara 
subsequent. 


296  History  of  the  Bank  of  England. 

faction  amonnr  the  disinterested.  "  The  Tlmea''''  continued  its  progressive 
warnings.  On  the  17th  of  October,  a  correspondent  wrote  that  among 
the  directors  of  the  new  railways  "there  were  some  most  notorious 
scamps,  alias  swindlers,  who  never  possessed  a  penny  in  the  world,  and 
never  could  oi*  would  have  possessed  one,  save  what  might  arise  from 
their  infamous  designs,"  Another  added,  "  Nothing  seems  to  come 
amiss  to  them ;  north,  south,  east  and  west — the  Mauritius,  West  Indies, 
French,  Spanish,  Italian  ;  their  enormous  appetite  hath  stomach  for  them 
all."  By  Friday,  the  18ih,  these  masterly  exposures,  and  the  advance  in 
the  rate  of  interest,  checked  the  progress,  and  produced  a  general  gloom. 

The  alarm  had  now  fairly  seized  the  speculators,  who  vented  their 
spleen  in  decrying  "  The  Times'''  and  in  abusing  the  bank.  The  prices  of 
all  shares  fell  in  value.  In  vain  the  holders  argued  that  an  advance  in 
the  bank  rate  of  one-half  per  cent,  ought  not  to  aft'ect  those  who  were  will- 
ing to  pay  twenty  or  thirty  per  cent,  for  accommodation  ;  that  rail-roads 
were  as  good  as  they  ever  were  ;  and  that  there  was  no  just  cause  for  their 
failing.  In  vain  they  asserted  that  the  journal  which  had  so  evidently  stop- 
ped their  career  was  not  free  from  pecuniary  views ;  the  voice  of  "  The 
Times'''  spoke  the  voice  of  the  disinterested,  and  a  "  voice  potential  double 
as  The  Times"  the  voice  of  truth,  asserted  to  all  intelligent  listeners,  that 
the  "madness  which  had  method  in  it"  had  passed  away,  and  that  panic 
and  peril  awaited  the  dealers.  In  vain  meetings  were  held,  and  pro- 
moters and  provisional  committee-men  pledged  themselves  to  punish 
"  The  Times"  by  sending  no  more  advertisements  to  it  :  the  danger  of 
their  position  was  evident ;  and  many  holders  of  scrip  were  prepared  to 
escape,  at  almost  any  sacrifice. 

The  higher  the  premiums,  the  more  eager  were  the  purchasers,  before 
the  bubble  burst,  and  then,  the  lower  the  price  fell,  the  more  anxious 
were  they  to  dispose  of  their  property  ;  thus  rendering  the  value  tea 
times  less  than  it  might  otherwise  have  been.  So  great  a  fright  had 
seized  upon  the  unhappy  speculators,  that  the  very  men  who  boasted  of 
realizing  thousands  were  urgent  in  offering  large  premiums  to  any  person 
who  would  relieve  them  of  the  responsibility.  The  warning  which  had 
been  given  at  an  earlier  period  was  fulfilled.  "  When  the  crash  comes, 
as  come  it  soon  inevitably  will,  it  may  not  be  the  scrip-holder  alone  that 
will  be  involved  in  ruin,  but  provisional  committee-men,  who  had  con- 
gratulated themselves  on  their  skilful  execution  of  the  manoeuvre  of 
'getting  out,' may  find  themselves  still  'in,'  to  an  extent  which  they 
never  expected."  The  earnestness  of  the  railway  papers  to  prove  that 
there  could  be  no  difliculty  in  paying  the  deposits  was  almost  amusing. 
It  was  placed,  with  the  utmost  ingenuity,  in  all  forms  and  phases ;  and  it 
was  remarked  that  the  effort  reminded  of  the  Indian  fable  of  the  creation 
of  the  world — that  the  globe  rests  first  on  an  elephant,  and  the  elephant 
on  a  tortoise ;  but,  when  the  Brahmins  are  asked  what  the  last  rests  on, 
there  is  no  reply.  An  open  swindling  had  been  adopted  ;  and  one  of 
the  most  significant  signs  of  the  times  was  in  constant  advertisements  of- 
fering for  sale  the  instruments  of  engineers.  The  following  clever  but  in- 
famous scheme  was  successfully  pursued  : 

Twelve  "  leading  men"  in  the  city  brought  out  a  project  for  a  railway. 
The  deposit  was  trifling,  but  their  standing  enabled  them  to  demand  a 


Abatement  of  the  Alarm — Evil  Effects,  297 

heavy  premium.  They  cleared  by  this  £25,000  apiece,  and  shortly 
afterwards  sent  round  a  circular,  that  unforeseen  engineering  difficulties 
rendered  necessary  the  abandonment  of  the  scheme,  and,  with  a  trifling 
per  centage  deducted  for  expenses,  the  deposits,  not  the  premiums,  were 
returned.  An  endeavor,  at  the  time,  to  establish  the  truth  of  this  pro- 
duced the  reply,  "  It  is  likely  to  be  true  of  so  many,  that  it  will  be  use- 
less to  fix  it  upon  any  particular  company." 

The  panic  contiimed,  and  "  The  Timc^''  continued  its  startling  warn- 
ings with  a  tone  that  must  have  penetrated  the  hearts  of  those  who  had 
unhappily  consented  to  become  directors  or  provisional  committee-men. 
"  It  is  quite  impossible  that  men  who  have  been  notoriously  little  better 
than  swindlers  all  their  lives,  should  have  become  suddenly  honest  by 
being  chosen  members  of  a  provisional  committee.  Doubtful  characters 
do  occasionally  get  smuggled  into  the  direction  of  reputable  companies, 
but  it  is  utterly  inipo.^sible  that  those  schemes  can  be  soundly  constituted 
which  allow  ihe  almost  indiscriminate  admission  of  men  of  straw,  of  un- 
certificated bankrupts,  and  recently  discharged  insolvents."  "  Can  twen- 
ty millions  of  money,"  wrote  "  The  Bankers''  Mac/azine,^''  "  be  withdrawn 
annually  from  circulation  without  interfering  with  the  necessary  business 
of  the  country  ?" 

These  things  produced  their  natural  results.  The  evil  commenced  to 
abate;  and  it  was  announced  on  the  24th  of  October,  1845,  a  little  more 
than  a  week  after  the  first  alarm  had  been  sounded,  that,  "  should  the  de- 
pression continue,  the  alleys  in  the  neighborhood  of  the  stock  exchange 
will  be  speedily  cleared  of  the  horde  of  petty  gamblers  and  letter  dealers 
that  at  present  infest  those  localities.  It  will  be  some  satisfaction  to  the 
public  to  know  that  there  is  every  prospect  of  the  clearance  of  this  nui- 
sance being  shortly  accomplislied."  The  fluctuations  in  the  periodical 
returns  of  the  bank  were  eagerly  watched  ;  and  each  week  the  apparent 
impossibility  of  paying  up  the  deposits  was  confirmed.  It  was  what  has 
since  been  finely  termed  the  "  rushing  mania  of  a  nation." 

But  the  evil  spread  to  the  innocent.  Those  who  had  pursued  their  le- 
gitimate calling  found  a  difficulty  in  collecting  their  money  from  those 
who  had  been  engaged  in  railways  ;  and  wholesale  houses  directed  their 
travelers  "to  inquire  how  their  customers  stood  in  the  share  market,  and 
to  press  them  accordingly." 

Of  this  prevailing  madness,  however,  the  evil  eflfects  remained  long 
after  the  hope  had  departed.  Men  of  character,  who  had  worked  hard 
for  the  independence  they  had  gained,  had  consented,  in  an  evil  hour,  to 
join  the  committees  of  projected  companies.  In  the  heiglit  of  their  delu- 
sion they  talked  of  large  profits,  made  extensive  purchases,  lived  in  a 
costly  style;  but  they  soon  fouu'l  out  that  not  only  were  they  liable  for 
their  individual  risk,  but  were  compelled  to  sell  their  property  at  a  sacri- 
fice, and  fly  to  a  foreign  sod  from  their  relentless  creditors.  As  an  cvi-. 
dence  of  the  thoughtlessness  of  the  period,  a  line,  known  as  the  Oxford 
and  Wolverhampton,  on  which  '.^^  per  cent,  was  guaranteed  by  tiie 
trunk  line,  reached  a  high  premium  ;  the  same  line  has  now  4  per  cent, 
guaranteed,  but  is  at  10  discount.  lu  one  instance,  a  person  who  had 
stepped  out  of  his  legitimate  path  to  speculate  in  these  securities,  was 


298  History  of  the  Bank  of  England. 

paying  200  per  cent,  in  the  stock  exchange  at  the  very  time  that  his  bills 
were  being  taken  at  3^  per  cent,  in  the  discount  market. 

By  the  arrangements  of  the  board  of  trade,  the  plans,  sections  and  docu- 
ments of  those  companies  which  were  anxious  to  forward  their  appear- 
ance before  the  railway  committee,  were  to  be  lodged  by  the  30th  of 
November.  There  was  no  time  to  be  lost,  and  artists  and  artisans  alike 
reaped  a  golden  harvest.  It  is  almost  impossible  to  imagine  the  hurry 
and  eagerness  displayed  by  the  promoters  of  the  various  lines. 
Draughtsmen  were  enticed  from  the  continent  by  the  hope  of  high 
wages  and  continued  occupation.  Youths  not  out  of  their  servitude 
were  employed  on  important  works.  The  Sabbath  was  desecrated  ;  en- 
gravers worked  without  rest,  until  exhausted  nature  demanded  her  trib- 
ute, and  they  snatched  a  hasty  repose.  The  most  extravagant  pay  was 
granted  to  surveyors  and  engineers;  the  merest  novices  received  employ- 
ment, and  all  regular  business  was  abandoned.  Tricks  of  all  sorts  were 
played  ;  and  in  one  instance  the  whole  of  the  type  and  stock  in  trade  of 
a  printer  was  purchased  by  one  company,  to  prevent  its  rival  from  pub- 
lishing an  important  document  by  a  particular  period.  The  ruse  was 
successful,  and  the  document  behind  its  time.. 

On  the  last  day  allotted  for  the  reception  of  the  plans,  a  scene  was  wit- 
nessed which  must  have  astonished  the  officials  at  the  board  of  trade. 
As  the  time  approached,  an  anxiety  which  passes  belief  was  evinced. 
Higher  wages  were  paid  to  those  who  could  or  would  work  in  preparing 
the  plans.  Some  contracts  were  abandoned,  from  the  impossibility  of 
fulfillino;  them.  Nio;ht  after  nijrht  witnessed  the  earnest  workman  still 
snatching  a  brief  repose  for  an  hour  or  two,  that  he  might  resume  his  la- 
bors with  greater  energy.  Post-horses  were  in  demand.  Special  trains 
brought  plans  from  all  parts  of  England.  Railway  companies  refused 
trains  which  would  assist  opposition  projects  ;  and  the  exertion  made  to 
lodge  those  which  were  ready,  is  almost  incalculable.  The  clerks  were 
overwhelmed  with  them  ;  and  though  an  additional  number  of  those  gen- 
tlemen were  employed,  it  was  impossible  to  keep  pace  with  the  incessant 
arrivals.  The  place  became  crowded.  The  last  hour  was  approaching. 
An  alarm  seized  on  all  that  the  necessary  forms  w^ould  not  be  gone 
through  in  time.  The  clock  struck,  and  the  doors  were  closing,  when  a 
gentleman,  with  the  plans  of  a  proposed  railway  for  Surrey,  rushed  in, 
and  succeeded  in  lodging  his  charge.  The  doors  were  then  closed,  and, 
in  a  short  time,  a  post-chaise,  with  foaming  steeds,  galloped  up  to  the  en- 
trance. Down  the  passage,  and  towards  the  office,  rushed  the  three  oc- 
cupants, with  their  cherished  papers.  The  door  was  shut ;  but  railway 
persons  deemed  themselves  privileged,  and  the  bell  was  loudly  rung. 
The  unsuspicious  inspector  of  police  answered  the  ring ;  and  the  huge 
documents  were  thrown  in  at  a  venture,  but  were  again  thrown  into  the 
street.  Many  were  too  late  for  the  appointed  hour.  The  labor  of  anx- 
ious days  and  weary  nights,  the  results  of  plotting  heads  and  crafty 
brains,  were  rejected. 

Thus  ended  the  wild  excitement  of  a  period  within  the  memory  of  all. 
It  is  another  evidence  of  the  truth  of  Mr.  Jones  Lloyd's  assertion,  that 
these  events  occur  in  cycles ;  it  is  another  proof  that  no  warning  can  save 
a  people  determined  to  grow  suddenly  rich.     The  delusion  passed  ;  but 


Conclusion.  299 

the  effects  remained.  Business  was  long  paralyzed.  The  small  trader 
who  had  neglected  his  calling  was  ruined.  The  merchant  who  had  em- 
barked in  the  adventurous  speculations,  found,  to  his  cost,  that  the  reck- 
oning was  yet  to  come.  The  deposits  were  to  be  met,  and  many  pos- 
sessed no  money  wherewith  to  pay  them.  They  had  embarked  in  en- 
gagements which  they  could  not  fulfil,  and  a  fearful  prospect  awaited 
them.  Notwithstanding  the  wholesale  manner  in  which  the  new  lines 
were  rejected,  contracts  for  a  certain  amount  of  work,  involving  the  out- 
lay of  a  proportionate  capital,  were  entered  into  by  the  conductors  of 
various  rail-roads.  The  deposits  have  yet  to  be  paid.  The  question  has 
yet  to  be  decided  whether  the  surplus  resources  of  the  country  will  be 
suflBcient  to  meet  them,  and  on  that  doubtful  question  rests  the  welfare 
of  the  nation  until  the  last  call  of  the  last  railway  has  been  fulfilled.  It 
is  to  be  feared,  to  use  the  homely  illustration  of  Benjamin  Franklin, 
that  England  must  yet  "  pay  dearly  for  her  whistle." 

It  was  a  somewhat  curious  circumstance  that  the  first  half  year  the 
bank  were  able  to  shorten  the  shuttings  was  at  a  period  when  the  mone- 
tary interest  required  it  most  urgently.  The  following,  from  "  The 
Ti7nes"  is  a  satisfactory  proof  that  the  service  was  publicly  appreciated : 
"  Much  credit  is  due  to  the  directors  of  the  bank  for  the  arrangements 
made  to  shorten  the  period  during  which  the  books  are  to  be  closed 
against  transfers  of  stock.  Last  year  the  shutting  day  was  the  3d  of  De- 
cember, but  the  approaching  shutting  day  is  not  till  the  10th  of  Decem- 
ber. At  all  times  an  additional  week  for  public  transfers  is  valuable,  but 
is  most  particularly  so  at  present.  There  has  not  occurred  for  many 
years  a  period  for  closing  the  bank  books  against  transfers  which  has  been 
regarded  with  so  much  anxiety." 

The  present  history  closes  with  the  railway  madness  of  1845.  The 
strange  events  which  have  since  transpired,  the  action  of  the  new  charter, 
the  fearful  failures  which  have  arisen  from  the  fruitful  harvest  of  1847,* 
witli  other  important  occurrences,  are  too  recent  to  be  fairly  or  freely 
discussed  by  the  writer.  We  are  yet  in  the  midst  of  a  storm  which  is 
shaking  the  very  pillars  of  the  commercial  world  ;  and  the  future  history 
of  the  Bank  of  England  promises  to  surpass  in  interest  and  importance 
any  thing  which  has  hitherto  been  related. 

*  Mr.  Alison  charges  the  revulsion  of  1847  to  free  trade  doctrines.  The  origin  of 
free  trade  is  attributed  by  him  to  Adam  Smith  and  Quesnay,  instead  of  Brougham, 
HusKissoN,  CoBDEN,  Peel  and  Bright.  The  resolutions  introduced  into  Parliament 
by  Mr.  Brougham  in  1817,  were  among  the  first  steps  in  this  direction  in  tliat  body. 
Sir  R.  Peel  opposed  the  doctrine  in  1841,  but  afterwards  adopted  it.  "  The  inevi- 
table effect  of  adopting  the  free  trade  principle,  for  any  length  of  time,  by  an  old 
State,  always  has  been,  and  always  must  be,  that  the  agriculture  of  that  State  is  de- 
stroyed, its  independence  endangered,  and  at  length  its  existence  terminated.  This  it 
was  which  occasioned  the  fall  of  Rome ;  this  it  is  which  will  occasion  the  destruction, 
in  the  end,  of  the  British  empire.  The  reason  is  to  be  found  in  a  cause  of  universal 
application  and  irresistible  force,  but  so  simple  and  familiar,  that,  like  an  apple 
falling  to  the  ground,  men  were  long  in  seeing  the  explanation  of  the  min'hty  phe- 
nomenon, which  lies  in  a  matter  of  daily  occurrence.  It  is  this :  that  every  thing 
which  is  plentiful,  and  money  among  the  rest,  becomes  cheap.  The  necessary  effect 
of  this  cheapening  of  money  is,  that  every  thing  else  becomes  dear  in  the  rich 
State ;  and  thence,  under  the  free  trade  syslem,  the  ruin  of  its  agricultural  indus- 
try."— Alison's  Europe,  vol.  6,  p.  235. 


300  History  of  the  Bank  of  England. 


CHAPTER   XXVI 


TRADITIONS    CONCERNIVG    THE    BANK STOLEN    NOTES STRATAGEM    OF   THE   DUG   DK   CHOI- 

6EUL — LOST     NOTE — DESCRIPTION    OF    TUE    BANK WEIGUING     MACHINE — INTERNAL     AK- 

RA.N  CEMENTS. 

In  tlic  liistory  of  an  establishment  wliich  for  more  than  a  century  has 
veiled  its  transaclions  with  an  ahnost  jealous  secrecy,  many  occurrences 
have  taken  phice  which  are  now  only  known  by  the  dim  lij^lit  of  tradi- 
tion. Tlie  periodicals  of  tlie  time  are  replete  with  remarkable  events, 
some  of  which  are  often  related  with  a  circumstance  and  a  verisimilitude 
arising  either  from  their  being  founded  on  fact,  or  from  a  deliberate  de- 
ception for  which  there  is  no  adequate  cause.  Great  trouble  has  been 
taken  to  verify  those  which  are  now  presented  to  the  reader's  notice, 
and  though  the  effort  has  been  futile,  yet,  where  it  has  been  found  prac- 
ticable to  test,  upon  other  subjects,  the  source  from  which  they  have 
been  derived,  it  has  always  proved  correct;  and  this  is  strong,  though 
indirect,  evidence  of  their  truth.  The  following  arc  most  worthy  of  rela- 
tion : 

The  principal  clerk  of  one  of  the  bankers  having  robbed  his  employer 
of  Bank  of  England  notes  to  tlie  amount  of  twenty  thousand  pounds, 
made  his  escape  to  Holland.  Unable  to  present  them  himself,  he  sold 
them  to  a  Jew.  The  price  which  he  received  does  not  appear  ;  but  there 
is  no  doubt  that,  under  the  circumstances,  a  good  bargain  was  made  by 
the  purchaser.  In  the  mean  time  every  plan  was  exhausted  to  give  pub- 
licity to  the  loss.  The  numbers  of  the  notes  were  advertised  in  the 
papers,  with  a  request  that  they  might  be  refused ;  and  for  about  six 
months  no  information  was  received  of  the  lost  property.  At  the  end  of 
that  period,  the  Jew  appeared  with  the  whole  of  his  spoil,  and  demanded 
p;iyment,  which  was  at  once  refused,  on  the  plea  that  the  bills  liad  been 
stolen,  and  that  payment  had  been  stopped. 

The  owner  insisted  upon  gold,  and  the  bank  persisted  in  refusing. 
But  the  Jew  was  an  energetic  man,  and  was  aware  of  the  credit  of  the 
corporation;  he  was  known  to  be  possessed  of  immense  wealth;  and  be 
went  deliberately  to  the  exchange,  where,  to  the  assembled  merchants  of 
London,  in  the  presence  of  her  citizens,  lie  related  publicly  that  the  bank 
liad  refused  to  honor  their  own  bills  for  twenty  thousand  pouuils;  that 
their  credit  was  gone ;  their  affairs  in  confusion  ;  and  that  they  had  stopped 
payment.  The  exchange  wore  every  appearance  of  alarm  ;  the  Hebrew 
showed  the  notes  to  corroborate  his  assertion.  He  declared  that  -they 
had  been  remitted  to  him  from  Holland  ;  and  as  his  transactions  were 
known  to  be  extensive,  there  appeared  every  reason  to  credit  his  state- 
ment, lie  then  avowed  his  intention  of  advertising  this  refusal  of  the 
bank  ;  and  the  citizens  thought  there  must  be  some  truth  in  his  bold 
announcement. 


French  Stratagem.  301 

Information  readied  the  directors,  who  grew  anxious,  and  a  mcsseng-er 
was  sent  to  inform  the  holder  that  he  might  receive  cash  in  exchange  for 
the  notes.  "  In  any  other  countr}',"  says  the  person  who  relates  this 
tradition,  "the  Jew  would  liave  been  tried  as  a  calumniator;  but  in  Eng- 
land, the  bank,  the  soul  of  the  State,  would  have  lost  the  cause.  The 
law  could  not  hinder  the  holder  of  the  notes  from  interpreting  the  refu- 
sal that  was  made  of  payment  according  to  his  fancy  ;  nothing  could 
prevent  hira  from  saying  that  he  believed  the  excuse  was  only  a  pretext 
to  gain  time  ;  and  though  intelligent  people  would  not  credit  the  story, 
the  majority  would  have  been  alarmed,  and  would  not  have  taken  their 
notes  for  cash.  In  short,  the  Jew  was  acquainted  with  the  nation  and  its 
laws,  and  he  gained  his  point."  It  must  also  be  remembered  that  at  so 
early  a  period  the  reputation  of  the  company  was  not  so  firmly  established 
as  at  the  present  time. 

Among  the  many  runs  upon  the  bank  which  have  been  recorded,  the 
following  is  not  the  least  remarkable.  The  Due  De  Choiseul,  during 
the  American  war,  hazarded  a  project,  which,  had  it  been  successful,  would 
have  injured  the  credit  of  the  establishment,  and  for  a  period  destroyed 
the  energies  of  the  nation.  Aware  of  the  importance  of  this  corporation 
to  the  State,  and  that  Great  Britain  owed  her  success  in  war  partially  to 
the  bank,  he  conceived  the  idea  of  using  all  the  efforts  of  France  to  de- 
stroy the  power  of  the  company,  trusting  that  a  triumphal  close  to  the 
contest  between  the  two  countries  might  be  produced.  Some  millions 
of  livres  added  to  the  zeal  of  the  French  emissaries,  who  discovered  a 
period  when  the  bullion  was  somewhat  low,  and  spread  reports  calculated 
to  injure  the  reputation  of  the  corporation.  Collecting  all  the  notes  which 
they  could  possibly  procure,  they  poured  them  into  the  bank,  and  carried 
away  the  gold  with  a  parade  which  attracted  the  attention  it  sought. 
The  old  cry  arose  of  a  run  upon  the  bank,  and  in  a  few  hours  the  whole 
city  was  in  motion.  Volumes  of  paper  were  presented,  and  gold  received 
in  exchange.  The  consternation  of  the  directors  was  in  proportion  to 
the  suddenness  of  the  attack.  The  alarm,  far  from  being  quieted,  be- 
came every  day  more  general.  Post-chaises  poured  in  from  the  provinces. 
The  application  for  specie  became  more  urgent.  There  was  no  mode  of 
judging  to  what  extent  an  attempt  so  unprecedented  and  so  unexpected 
might  be  carried.  The  eftbrts  of  the  national  enemy  seemed  prospering, 
and  for  some  days  England  appeared  to  be  upon  the  brink  of  the  greatest 
evil  which  could  happen.  Time  was  necessary  to  collect  specie,  and 
people  were  employed  day  and  night  to  coin  money.  All  the  gold  which 
by  any  stratagem  could  be  gathered  was  brought  into  bank.  The  method 
of  paying  by  weight  was  discontinued.  The  sums  claimed  were  delivered 
with  greater  deliberation ;  and  the  money  placed  guinea  by  guinea  upon 
the  table.  For  nine  days  this  fever  continued  ;  but  the  method  adopted 
by  the  directors,  with  concurrent  circumstances,  gave  time  for  the  pro- 
duction of  a  large  supply  of  gold.  All  the  demands  were  met ;  the 
claimants,  finding  there  was  no  cause  for  doubt,  resumed  their  confidence 
in  the  bank,  and  the  scheme  of  the  Due  De  Choiseul  proved  ineffectual. 
An  extraordinary  affair  happened  about  the  year  1740.  One  of  the 
directors,  a  very  rich  man,  had  occasion  for  £30,000,  which  he  was  to  pay 
as  the  price  of  an  estate  he  had  just  bought ;  to  facilitate  the  matter,  he 
20 


302  History  of  the  Bank  of  England. 

carried  the  sum  with  him  to  the  bank  and  obtained  for  it  a  bank  note. 
On  his  return  home,  he  was  suddenly  called  out  upon  particular  business ; 
he  threw  the  note  carelessly  on  the  chimney,  but  when  he  came  back  a 
few  minutes  afterwards  to  lock  it  up,  it  was  not  to  be  found.  No  one 
had  entered  the  room  ;  he  could  not,  therefore,  suspect  any  person.  At 
last,  after  much  incftectual  search,  he  was  persuaded  that  it  had  fallen 
from  the  chimney  into  the  fire.  The  director  went  to  acquaint  his  col- 
leagues Avith  the  misfortune  thnt  liad  happened  to  him  ;  and  as  he  was 
known  to  be  a  perfectly  honorable  man  he  was  readily  believed.  It  was 
only  about  four-and-twenty  hours  from  the  time  that  he  had  deposited  his 
money ;  they  thought,  therefore,  that  it  would  be  hard  to  refuse  his  re- 
quest for  a  second  bill.  lie  received  it  upon  giving  an  obligation  to 
restore  the  first  bill,  if  it  should  ever  be  found,  or  to  pay  the  money  him- 
self, if  it  should  be  presented  by  any  stranger.  About  thirty  years  after- 
wards (the  director  having  been  long  dead,  and  his  heirs  in  possession  of 
his  fortune,)  an  unknown  person  presented  the  lost  bill  at  the  bank,  and 
demanded  payment.  It  was  in  vain  that  they  mentioned  to  this  person 
the  transaction  by  Avhich  that  bill  was  annulled  ;  he  would  not  listen  to 
it ;  he  maintained  that  it  had  come  to  him  from  abroad,  and  insisted 
upon  immediate  payment.  The  note  was  payable  to  bearer ;  and  the 
thirty  thousand  pounds  were  paid  him.*  The  heirs  of  the  director  would 
not  listen  to  any  demand  for  restitution  ;  and  the  bank  was  obliged  to 
sustain  the  loss.  It  was  discovered  afterwards  that  an  architect,  having 
purchased  the  director's  house,  had  taken  it  down,  in  order  to  build  an- 
other upon  the  same  spot,  had  found  the  note  in  a  crevice  of  the  chimney, 
and  made  his  discovery  an  engine  for  robbing  the  bank. 

The  interior  arrangements  of  the  Bank  of  England  are  not  the  least 
remarkable  part  of  its  economy.  The  citizen  who  passes  it  on  his  way  to 
his  counting-house  ;  the  merchant  who  considers  it  as  an  edifice  where  he 
gets  his  bills  discounted  or  lodges  his  bullion  for  security  ;  and  the  banker 
who  regards  it  in  his  daily  visits  only  as  a  place  to  issue  the  various 
notices  that  interest  him,  look  on  it  with  an  indifferent  eye.  Even  to  the 
stranger  its  external  appearance  is  almost  lost  in  contemplating  the  nobler 
structure  which  looks  down  upon  it.  But  to  visit  its  various  oflSces,  to 
enter  into  the  mode  in  which  its  affairs  are  conducted,  and  to  witness  the 
almost  unerring  regularity  of  its  transactions,  cannot  fail  to  excite  admi- 
ration. Within  that  building,  occupying  a  few  feet  less  than  three  acres, 
IS  the  remarkable  regularity  and  precision  which  has  procured  from  states- 
men and  political  economists,  from  merchants  and  from  bankers,  the 
highest  and  most  complimentary  eulogiums.  In  its  management  all  that 
capital  can  command,  or  intellect  devise,  is  introduced.  The  machinery 
of  Manchester  on  a  small  scale,  may  be  here  witnessed.  The  steam  en- 
gine performs  its  work  with  an  intelligence  almost  human,  as  by  it  the 
notes  are  printed,  and  the  numbers  registered,  to  guard  against  fraud. 
Wlien  the  spectator  passes  from  building  to  building,  and  marks  each 


*  This  appears  to  be  a  curious  decision.  The  holder  certainly  could  not  prove 
value  paid  for  the  note.  No  one  would  purchase  except  upon  due  inquiry,  in  such 
an  extraordinary  sum ;  and  the  statute  of  limitations  would  seem  to  be  operative  in 
such  a  case. — Ed. 


Enlargement  of  the  Building.  303 

place  devoted  to  its  separate  uses,  yet  all  of  them  links  in  one  chain,  he 
cannot  fail  to  be  affected  with  the  grandeur  of  the  body  which  can  com- 
mand so  extensive  a  service. 

The  most  interesting  place  connected  with  the  machinery  of  the  bank 
is  the  weighing  office,  which  was  established  a  few  years  ago.  In  conse- 
quence of  a  late  proclamation  concerning  the  gold  circulation,  it  became 
very  desirable  to  obtain  the  most  minute  accuracy,  as  coins  of  doubtful 
weight  were  plentifully  offered.  Many  complaints  Avere  made  that  sove- 
reigns which  had  been  issued  from  one  office  were  refused  at  another,  and 
though  these  assertions  were  not,  perhaps,  always  founded  on  truth,  yet 
it  is  more  than  probable  that  the  evil  occasionally  occurred.  Every  effort 
was  made  by  the  directors  to  remedy  this,  some  millions  of  sovereigns 
being  weighed  separately,  and  the  light  coins  divided  from  those 
which  were  full  weight.  Fortunately  the  governor  for  the  time  being, 
before  whom  the  complaints  principally  came,  had  devoted  his  thoughts 
to  scientific  pursuits,  and  he  at  once  turned  his  attention  to  discover  the 
causes  which  operated  to  prevent  the  attainment  of  a  just  weight.  In 
this  he  was  successful ;  and  the  result  of  his  inquiry  was  a  machine  re- 
markable for  an  almost  elegant  simplicity.  About  eighty  or  one  hundred 
light  and  heavy  sovereigns  are  placed  indiscriminately  in  a  round  tube ; 
as  they  descend  on  the  machinery  beneath,  those  which  are  light  receive 
a  slight  touch,  and  this  moves  them  into  their  proper  receptacle,  while 
those  which  are  the  legitimate  weight  pass  into  their  appointed  place. 
The  light  coins  are  then  defaced  by  the  sovereign  cutting  machine,  observ- 
able alike  for  its  accuracy  and  rapidity.  By  this  two  hundred  may  be 
defaced  in  one  minute,  and  by  the  weighing  machinery  35,000  may  be 
weighed  in  one  day.* 

It  has  been  stated  in  a  previous  part  of  this  work  that  the  first  stone  of 
the  original  building  was  laid  in  1732,  that  the  edifice  was  finished  in 
1734,  and  that  this  comprised  the  centre  of  the  present  building,  which 
is  of  the  Ionic  order,  and  occupied  the  space  previously  employed  by  the 
house  and  gardens  of  Sir  John  Houblon,  the  first  governor.  The  design 
was  by  Mr.  George  Sampson  ;  the  fabric  was  raised  under  his  superin- 
tendence ;  the  front  was  of  stone,  and  the  principal  ofiices  were 
formed  of  wood.  As  the  importance  of  the  corporation  increased,  the 
building  became  enlarged,  and  between  1770  and  1786,  the  wings  were 
erected,  under  the  direction  of  Sir  Robert  Taylor,  the  design  being 
taken  by  him  from  a  small  building  in  the  Belvidere  Gardens,  at  Rome. 
The  columns  are  of  the  Corinthian  style,  arranged  in  pairs  along  the  front, 
supporting  at  each  end  a  pediment  and  a  balustraded  entablature  between, 
with  arched  recesses  in  the  place  of  windows.  The  remainder  of  the  building 
was  erected  principally  by  one  who  has  left  the  evidences  of  a  cultivated 
mind  and  a  pure  taste  in  many  public  buildings.  On  the  death  of  Sir  Rob- 
ert Taylor,  in  1788,  the  office  of  the  architect  of  the  bank  became 
vacant,  and  Mr.  Soane  was  appointed  to  the  post  of  honor.     *'  It  opened," 


*  An  eminent  member  of  the  Royal  Society  mentioned  to  the  writer  that  amongst 
scientific  men  it  is  a  question  whether  the  weighing  machine  of  Mr.  Cotton  is  not 
the  finest  thing  in  mechanics,  and  that  there  is  only  one  other,  the  envelope  folding 
machine  of  De  la  Rue,  to  be  mentioned  with  it. 


304  History  of  the  Bank  of  England. 

says  tlie  writer  of  tlic  Illustrations  of  the  Public  Buildings  of  the 
Metropolis,  "  a  wide  field  for  his  fancy  and  talents ;  for  the  buildings 
of  the  bank  were  at  that  time  limited  in  extent,  inconvenient  in  many 
essential  parts,  and  were  also  ungracious  in  architectural  character. 
Unlike  his  predecessors,  Sampson  and  Sir  Robert  Taylor,  Mr.  Soane 
commenced  his  operations  by  making  an  elaborate  ground-plan  of 
the  whole  range  of  offices,  and  another  plan  showing  a  design  for  erect- 
ing a  new  edifice,  to  be  progressively  executed,  without  interrupting  the 
necessary  and  extensive  business  of  this  great  national  establishment." 
In  1780  the  directors,  alarmed  at  the  dangerous  facility  which  the 
adjacent  church  of  St.  Christopher  le  Stocks  gave  to  any  mob  possessed 
of  the  slightest  military  skill,  entered  into  a  negotiation  with  the  rector. 
Two  acts  of  Parliament  had  been  passed  to  enable  them  to  purchase 
ground  adjoining  their  establishment,  and  by  another  act  the  glebe  land, 
the  parsonages,  (kc,  belonging  to  the  rector  of  St.  Christopher  le  Stocks, 
were  vested  in  the  governor  and  company.  The  rotunda  was  built  in 
1795  by  Sir  John  Soane,  and  shortly  afterwards  application  was  made 
to  Parliament  for  extending  the  Lothbury  front  westward,  and  connecting 
the  whole  of  the  offices  then  built  with  those  proposed  to  be  erected,  to 
give  the  exterior  an  uniform  appearance.  The  notice  which  the  designs 
by  Sir  John  Soane  attracted  must  be  in  the  memory  of  many,  as,  from 
the  novelty  of  the  arrangement  and  the  style  of  architecture,  they  were 
altogether  new  to  the  critics  and  conosccnti  of  the  day. 

The  principal  entrance  to  the  bank  is  from  Threadneedle-street,  open- 
ing by  a  large  arched  gateway  into  a  quadrangular  paved  court,  with 
which  all  the  leading  communications  are  connected.  Prior  to  the  im- 
provements by  Sir  John  Soane,  many  of  the  offices,  between  which  a 
close  connection  was  desirable,  were  far  apart,  and  inconveniently  situ- 
ated for  business.  The  governor  and  directors,  being  anxious  to  remedy 
this  evil,  consulted  their  architect,  who  arranged  the  offices  into  one  uni- 
form plan,  to  which  he  proposed  that  all  future  additions  or  alterations 
should  be  made  subservient.  Under  his  direction  a  line  of  communica- 
tion w^as  opened  through  the  interior  from  north  to  south. 

The  pay  hall,  which  fronts  the  main  entrance,  is  a  part  of  the  original 
building  by  Sampson,  measuring  seventy-nine  feet  in  length  and  forty  in 
breadth  ;  and  at  the  eastern  end  is  the  statue  of  the  founder  of  the  bank. 
In  allusion  to  this  place,  the  Baron  Dupin  says,  in  his  "  Commercial 
Power  of  Great  Britain,"  "  The  administration  of  a  French  bureau,  with 
all  its  inaccessibilities,  would  be  startled  at  the  view  of  this  hall." 

The  bullion  office  is  only  remarkable  for  the  vast  store  of  treasure 
which  it  occasionally  contains.  "  I  understand  the  bullion  office,"  said  a 
witness  before  the  bullion  committee,  in  1810,  "  to  have  been  instituted 
merely  for  the  purpose  of  accommodation  and  safety  between  merchant 
and  merchant,  as  a  place  of  deposit ;  it  used  formerly  to  be  called  the 
warehouse."  It  is  exclusively  devoted  to  the  receipt  and  deposit  of  bul- 
lion ;  any  person  may  send  gold  to  this  office,  as  a  place  of  safety,  without 
incurring  any  charge,  unless  it  be  weighed,  when  a  small  per  rentage  is 
demanded.  It  formed  part  of  the  structure  by  Mr.  Sampson,  was  altered 
by  Sir  Robert  Taylor,  and  still  farther  improved  by  Sir  John  Soane 
^.n  his  accession  to  the  office  of  architect. 


The  Court  Room — Chief  Cashier's  Office.  305 

The  court  room  is  a  noble  apartment,  by  Sir  Robert  Taylor,  of  tlie 
composite  order,  about  sixty  feet  long  and  thirty-one  feet  six  inches  wide, 
with  large  Venetian  windows  on  the  south,  overlooking  that  which  was 
formerly  the  church-yard  of  St.  Christopher.  The  north  side  is  remark- 
able for  three  exquisite  chimney-pieces  of  statuary  marble,  the  centre  be- 
in^  the  most  raao-nificent.  The  east  and  west  are  distinguished  by  col- 
umns  detached  from  the  walls,  supporting  beautiful  arches,  which,  agam, 
support  a  ceiling  rich  with  ornament.  The  west  leads  by  folding-doors 
to  an  elegant  octagonal  committee-room,  with  a  fine  marble  chimney- 
piece.  The  governor's  room  is  square,  with  various  paintings,  one  of 
which  is  a  portrait  of  William  III.  in  armor,  an  intersected  ceiling,  and 
semi-circular  windows.  This  chimney-piece  is  also  of  statuary  marble  ; 
and  on  the  wall  is  a  fine  painting,  by  Harlow,  of  the  bank,  bank  build- 
ings Cornhill,  and  Royal  Exchange.  An  ante-room  contains  portraits  of 
Mr.  Abraham  Newland  and  Mr.  Daniel  Race,  cashiers,  taken  as  a  tes- 
timony of  the  approbation  of  the  directors.  In  the  waiting-room  are  two 
busts,  by  NoLLEKENS,  of  Charles  James  Fox  and  William  Pitt.  The 
original  rotunda,  by  Sir  Robert  Taylor,  was  roofed  in  with  timber ;  but 
when  a  survey  was  made,  in  1794,  it  was  found  advisable  to  take  it 
down ;  and,  in  the  ensuing  year,  the  present  rotunda  was  built,  under 
the  superintendence  of  Mr.  Soane.  It  measures  fifty-seven  feet  in  diam- 
eter, and  about  the  same  in  height  to  the  lower  part  of  the  lantern.  It 
is  formed  of  incombustible  materials,  as  are  all  the  ofiices  erected  under 
the  care  of  Sir  John  Soane.  For  many  years  this  place  was  a  scene  of 
constant  confusion,  caused  by  the  presence  of  stock-brokers  and  jobbers. 
In  1838  this  annoyance  was  abolished,  the  occupants  were  ejected,  and 
the  space  employed  in  cashing  the  dividend  warrants  of  the  fundholders. 
The  ofiices  appropriated  to  the  management  of  the  various  stocks  are  all 
close  to  or  branch  out  from  the  rotunda.  The  dividends  are  paid  in  two 
rooms  devoted  to  that  purpose,  and  the  transfers  are  kept  separate ;  they 
are  arranged  in  books,  under  the  various  letters  of  the  alphabet,  contain- 
ing the  names  of  the  proprietors,  and  the  particulars  of  their  property. 
Some  of  the  stock  offices  were  originally  constructed  by  Sir  Robert  Tay- 
lor, but  it  has  been  found  necessary  to  make  great  alterations,  and  most 
of  them  are  designed  from  some  classical  model ;  thus,  the  three  per  cent, 
consol  office,  which,  however,  was  built  by  Mr.  Soane,  is  taken  from  the 
ancient  Roman  baths,  and  is  eighty-nine  feet  nine  inches  in  length  and 
fifty  feet  in  breadth.  The  chief  cashier's  office,  an  elegant  and  spacious 
apartment,  is  built  after  the  style  of  the  Temple  of  the  Sun  and  Moon,  at 
Rome,  and  measures  forty-five  feet  by  thirty. 

The  fine  court,  which  leads  into  Lothbury,  presents  an  interesting  dis- 
play of  Roman  and  Grecian  architecture.  The  buildings  on  the  east  and 
west  sides  are  nearly  hidden  by  open  screens  of  stone,  consisting  of  a 
lofty  entablature,  surmounted  by  vases,  and  resting  on  columns  of  the 
Corinthian  order,  the  bases  of  which  are  on  a  double  flight  of  steps. 
This  part  of  the  edifice  was  copied  from  the  beautiful  temple  of  the 
sybils,  near  Tivoli.  A  noble  arch,  after  the  model  of  the  triumphal  arch 
of  CoNSTANTiNE,'at  Rouic,  forms  the  entrance  into  the  bullion  yard.  The 
entablature  rests  on  fiuted  Corinthian  columns,  supporting  statues,  which 
indicate  the  four  quarters  of  the  globe.     The  intercolumniations  are  or- 


306  History  of  the  Bank  of  England. 

namented  by  allegories  representing  the  Thames  and  the  Ganges,  executed 
by  Thomas  Banks,  the  academician,  the  roses  on  the  vaulting  of  the  arch 
being  copied  from  the  Temple  of  Mars  the  Avenger  at  Rome.  On  the 
death  of  Sir  John  Soane,  Mr.  Cockerell  was  chosen  to  succeed  him  in 
his  important  position.  The  style  of  this  gentleman  in  the  office  he 
designed  for  the  payment  of  the  dividend  warrants,  now  employed  as  the 
private  drawing  office,  is  very  difterent  to  the  erections  of  his  predeces- 
sor. The  taste  which  produced  the  elaborate  and  exquisite  ornaments  in 
this  room  is  in  strong  contrast  to  the  severe  simplicity  of  the  works  of 
Sir  John  Soane. 

The  new  machinery  for  printing  the  notes,  which  was  introduced  by 
Mr.  Oldham — the  invention  of  whom  has  been  employed  by  the  Austrian 
and  Irish,  no  less  than  by  the  English  bank — is  well  worthy  of  a  visit, 
but  would  be  uninteresting  to  delineate.  Its  effect  may  be  described  in 
the  assertion  that  the  power  formerly  employed  by  the  mechanic  in  pulling 
a  note  is  now  exerted  by  the  steam-engine.  The  machines  by  which  the 
bank  notes  are  numbered  on  the  dexter  and  the  sinister  halves,  each  bear- 
ing the  same  figures,  have  been  used  in  the  establishment  for  nearly  fifty 
years,  and  are  the  patents  of  Bramah  «fe  Co.  The  principle,  like  every 
other  intricacy  when  it  is  explained,  is  very  simple,  and  may  be  summed 
up  in  the  words  that,  as  soon  as  a  note  is  printed,  and  the  handle  reversed 
to  take  it  out  and  put  another  in  its  place,  a  steel  spring,  which  is  attached 
to  the  handle,  alters  the  number  to  that  which  should  follow.  The  whole 
of  the  printing  of  the  bank  is  executed  within  its  walls ;  the  ruling 
machines  are  the  simple  ones  generally  in  use  ;  the  presses  are  those 
invented  by  Cowper,  and  are  so  well  known  that  no  description  is  re- 
quired. 

By  the  appendix  it  may  be  seen  that  the  bank  commenced  business 
with  fifty-four  assistants,  the  salaries  of  whom  amounted  to  £4,350.  The 
total  number  employed  at  present  is  upwards  of  nine  hundred,  and  their 
salaries  exceed  £210,000, 

The  curiosities  of  the  bank  are  few.  It  possesses,  however,  a  collection 
of  ancient  coins,  which,  with  the  exceptions  of  those  of  the  British  Mu- 
seum and  of  Paris,  is  perhaps  the  finest  in  Europe.  Visitors  are  occa- 
sionally shown  some  notes  for  large  amounts,  which  have  passed  between 
the  bank  and  government ;  but  to  the  antiquarian  there  are  not  many 
attractive  objects. 

In  the  early  history  of  the  establishment  any  person  in  the  possession 
of  a  bank  note  might  demand  only  part  of  its  amount,  and  the  same 
plan  might  be  resorted  to  with  the  same  note  until  the  whole  of  the  sum 
due  upon  it  was  absorbed.  Some  of  these  are  still  shown  ;  on  the  last 
which  came  in  there  was  only  sixpence  to  receive. 

The  following  is  principally  derived  from  the  report  of  the  committee 
of  the  House  of  Commons,  and  is  given  almost  verbatim  : 

The  supreme  management  of  the  bank  is  vested  in  the  whole  court  of 
directors,  which  meets  weekly,  when  a  statement  is  read  of  the  position 
of  the  bank  in  its  securities,  bullion  and  liabilities.  The  directors  have 
equal  power,  and  should  a  majority  disapprove  of  the  arrangement,  they 
might  re-construct  it.  Eight  of  them  go  out  and  eight  come  in  annually, 
elected  by  the  court  of  proprietors ;  and  the  system  on  which  the  afiairs 


Management  of  the  Bank.  307 

of  the  bank  are  conducted  is,  of  course,  liable  to  change,  as  new  directors 
may  exert  their  individual  influence  on  it.  A  list  of  candidates  is  trans- 
mitted to  the  court  of  proprietors,  and  the  eight  so  recommended  uni- 
formly come  in.  Quakers  and  Hebrews  are  not  eligible ;  although 
many  are  so  Avell  versed  in  monetary  matters.  When  an  individual  is 
proposed  as~a  new  director,  inquiry  is  always  instituted  concerning  his 
private  character. 

The  qualification  is  the  possession  of  bank  stock  to  the  amount  of 
£2,000,  of  the  deputy-governor  ^£3,000,  and  of  the  governor  £4,000. 
For  many  years  the  directors  have  adhered  to  the  practice  of  possessing 
only  the  amount  of  qualification ;  and  when  the  twenty-five  per  cent. 
bonus  on  stock  was  given  to  the  proprietors,  they  merely  retained  their 
previous  amount.  They  are  responsible  for  the  management  of  the  affairs 
of  the  bank,  and  penalties  attach  to  their  conduct,  individually  or  collec- 
tively, upon  certain  occasions.  But  by  the  charter  they  were  not  respon- 
sible for  the  management  of  the  monetary  department  to  government ; 
and  the  whole  security  which  the  public  have  for  that  management  de- 
pends on  their  discretion,  subject  to  the  new  charter. 

If  the  mode  of  choosing  and  electing  directors  be  wrong,  it  is  in  the 
power  of  the  proprietors  to  change  it ;  but  in  Mr.  George  Grote's 
opinion,  it  would  be  most  difficult  to  devise  a  better  method.  *'  House 
lists"  are  common  in  many  institutions ;  and  it  has  long  been  thought 
that  the  present  method  is  better  for  the  public  than  any  other.  Al- 
though, strictly  speaking,  the  directors  are  the  sworn  servants  of  their 
constituents,  their  duty  to  the  bank  is  always  regulated,  to  a  certain 
degree,  by  the  demands  of  the  country.  "  It  has  happened  to  us,"  said 
Mr.  Richards,  "  to  feel  it  our  duty  to  our  proprietors  to  postpone  their 
interests,  in  order  to  effect  some  important  good  to  the  public  at  large,  in 
which  their  interest  might  be  mixed  up ;  it  has  not  been  the  practice  of 
the  bank  to  sacrifice  the  wishes  and  expectations  of  the  public  merely  to 
a  dry  consideration  of  the  interests  of  the  proprietors,  because  they  are 
so  blended  that  it  is  hardly  possible  to  keep  them  distinct."  Mr.  Lloyd 
thinks  the  limitation  of  the  right  of  election  exclusively  to  proprietors  of 
stock,  is  open  to  objection,  but  not  sufficiently  so  to  justify  any  alterations. 

Many  persons  consider  that,  if  the  present  system  with  reference  to 
the  private  deposits  in  the  bank  were  extended,  it  would  prove  beneficial 
to  the  traders  of  London.  This  consideration  has  induced  the  bank  to 
offier  the  usual  facilities  for  obtaining  advances  which  are  afforded  by 
private  bankers  to  their  customers.  There  is  every  reason  for  its  employ- 
ment as  a  bank  of  deposit,  and  most  especially  in  the  feeling  of  additional 
security.  The  want  of  confidence  in  the  private  bankers,  produced  by 
their  failures,  has  caused  a  great  increase  of  deposits  in  the  Bank  of  Eng- 
land since  1825.  The  directors  have  not  had  the  power  of  acting  upon 
any  fixed  system  till  a  late  period,  in  consequence  of  a  variety  of  circum- 
stances that  existed  prior  to  that  time.  For  instance,  from  1819  to  1822, 
the  bank  had  to  prepare  for  cash  payments,  and  to  contend  with  the  con- 
flicting character  of  the  circulation*  of  the  country  and  London,  governed 

*  To  make  any  direct  alteration  in  the  terms  of  the  contracts  entered  into  be- 
tween individuals,  would  be  a  degree  of  barefaced  oppression  and  tyrannical  inter- 


308  History  of  the  Bank  of  England. 

as  the  country  then  was  by  a  small  note  circulation.  While  that  circula- 
tion existed,  the  bank  was  liable  to  a  great  sudden  demand. 

In  the  two  last  months  of  the  year  1825,  the  demand  upon  the  bank 
was  nearly  two  millions  and  a  half  sterling  for  the  support  of  the  country 
circulation,  when  the  exchanges  were  nearly  at  par,  which  placed  the 
bank  in  a  peculiar  state  of  difKculty.  The  whole  embarrassment  of  that 
period,  with  regard  to  bullion,  arose  from  the  magnitude  of  the  demand, 
which  was  made  almost  entirely  for  the  purpose  of  upholding  the  small 
note  circulation.  The  holders  of  that  paper  were  the  lower  orders  of  the 
people,  whose  fears  are  extensively  acted  upon  in  times  of  distrust;  and, 
there  having  been  no  exchange  for  one-pound  notes  but  the  sovereign, 
the  demand  upon  the  bank  became  inevitable.  At  that  period  the  Lon- 
don bankers  also  pressed  very  much  for  gold,  but  they  served  merely  as 
the  channel  through  which  the  supply  was  sent  to  the  country.  Since 
the  circulation  of  the  one-pound  notes  has  ceased,  the  occasional  excessive 
demand  has  been  obviated. 

Whenever  there  is  a  deficient  capital  at  home,  for  the  purchase  of  silver, 
the  bank  may,  with  advantage  to  the  country,  preserve  the  gold  by  the 
exportation  of  silver,  and  by  purchasing  with  it  the  excess  of  bills  upon 
England  in  the  foreign  market.  The  operation  is  conducted  with  secrecy, 
but  with  the  full  concurrence  of  the  whole  court  of  directors ;  and  in 
making  such  a  use  of  their  silver,  their  sole  object  is  to  protect  the  gold, 
which,  in  times  of  an  unfavorable  exchange,  has  a  tendency  to  leave  tho 
country. 

ference  with  the  rights  of  property,  that  could  not  be  tolerated.  Those,  therefore, 
who  have  hitherto  endeavored  to  enrich  one  part  of  society  at  the  expense  of  anoth- 
er, have  found  it  necessary  to  act  with  greater  caution  and  reserve.  They  have  not, 
indeed,  relinquished  their  purpose,  but  they  have  been  obliged  to  substitute  the 
cunning  of  the  practical  cheat  for  open  and  avowed  injustice.  Instead  of  directly 
altering  the  stijjulations  in  contracts,  thej'  have  ingeniously  bethought  themselves 
of  altering  the  standard  by  a  reference  to  which  these  stipulations  had  been  ad- 
justed. They  have  not  said,  in  so  many  words,  that  ten  or  twenty  per  cent,  shall 
be  added  to,  or  deducted  from,  the  mutual  debts  and  obligations  of  society,  hut  they 
have  really  effected  the  same  thing  by  making  a  proportionable  change  hi  the  value  of 
the  currency.  Men,  in  their  bargains,  do  not  stipulate  for  signs  or  measures  of 
value,  but  for  real  equivalents.  Money  is  not  merely  the  standard,  by  a  compari- 
son with  which  the  relative  value  of  commodities  is  ascertained  at  any  given  period, 
but  it  is  also  the  equivalent,  by  the  delivery  of  a  fixed  amount  of  which  the  stipula- 
tions, in  almost  all  contracts  and  agreements,  may  be  discharged.  It  is  plain, 
therefore,  that  no  variation  can  take  place  in  its  value  without  essentially  affecting 
all  these  stii^ulations. — Edinburgh  Review,  July,  1821,  p.  468. 

Previously  to  179*7,  the  Bank  of  England  had  been  restrained  from  issuing  any 
notes  except  such  as  were  made  payable  in  gold  or  silver  coin,  of  the  legal  weight 
and  purity,  at  the  pleasure  of  the  holders — a  regulation  which  made  it  utterly  im- 
possible for  the  directors  of  the  bank  to  depress  the  value  of  their  notes  below  the 
value  of  the  coins  for  which  they  were  exchangeable.  But  the  order  in  council  of 
the  25th  February,  1797,  and  the  acts  of  Parliament  by  which  it  was  followed  up, 
by  removing  this  check,  effected  a  total  change  in  our  ancient  monetary  system, 
and,  instead  of  the  old  standard,  gave  us  the  self-interested  views  and  opinions  of 
twenty-four  irresponsible  individuals.  The  circulation  of  Bank  of  England  paper 
was  secured  by  its  being  exclusively  issued  in  payment  of  the  dividends,  or  of  the 
interest  of  the  public  debt,  and  by  its  also  being  received  as  cash  in  all  payments 
into  the  exchequer  ;  but  no  attempt  was  made  to  sustain  the  value  of  this  paper  on 
a  par  with  the  value  of  gold  or  silver.  Full  power  was  given  to  the  directors  of  a 
private  banking  company  to  raise  or  depress  the  value  of  money  as  their  whim  or  caprice 
might  suggest. — lb.,  p.  476. 


Conclusion.  309 

The  governor  or  deputy-governor,  one  of  whom  is  always  supposed  to 
be  in  the  house,  assisted  by  a  select  committee  of  three  directors,  con- 
ducts the  daily  business,  in  the  intervals  between  the  sittings  of  the 
court.  The  treasury  committee  consist  of  the  governor  and  deputy-gov- 
ernor, the  directors  who  have  passed  the  chair,  and  the  gentleman  next  in 
rotation  for  the  deputy-governorship.  The  bullion  is  purchased  by  the 
governor,  who  considers  he  has  no  power  to  refuse  the  issue  of  notes  in 
return  for  gold  bullion,  as  a  paper  currency,  founded  upon  gold,  is  the 
main  object  of  the  institution.  He  does  not  regulate  the  price  of  bul- 
lion, which  is  bought  at  £3  l7s.  9d.,  and  sold  at  £3  l7s.  10|^d.  It  was 
formerly  at  £3  17s,  6d.,  but  government  considered  this  too  low,  and 
suggested  the  existing  pi'ice. 

When  gold  coin  is  demanded  in  large  quantities,  it  may  be  deliv- 
ered in  bags  to  almost  any  amount  in  the  course  of  a  day.  But  the 
largest  amount  that  can  be  paid  in  one  day  by  about  twenty-five  clerks, 
if  counted  by  hand  to  the  public,  would  be  about  £50,000.  When 
large  sums  are  applied  for  by  bankers  or  others,  the  practice  of  the  tellers 
is  to  count  twenty-five  sovereigns,*  and  put  them  into  one  scale,  then 
to  count  twenty-five  more,  and  put  them  into  the  other  scale ;  and 
if  the  accuracy  of  the  scales  be  proved  by  their  balancing,  the  sum 
is  increased  in  each  scale  by  counting  to  two  hundred.  The  balance  is 
again  tested,  and  if  found  exact,  one  of  the  scales  is  emptied,  and  the 
two  hundred  sovereigns  in  the  other  serve  as  a  weight  the  whole  day  for 
delivery,  without  further  counting,  of  sums  divisible  into  two  hundred. 
In  this  way,  a  thousand  sovereigns  can  be  delivered  in  a  few  minutes ; 
and  upwards  of  £300,000  were  paid  to  bankers  and  others  on  the  14th 
of  May,  1832. 

The  amount  of  £500,  which  entitles  to  a  vote,  must  have  been  in  the 
name  of  the  proprietor  for  more  than  six  calendar  months. 

The  chapter  with  which  this  volume  concludes  might  have  been  in- 
creased to  an  almost  indefinite  extent.  A  brief  sketch,  however,  of  the 
building  machinery,  and  action  of  the  corporation,  is  all  that  the  writer 
deems  necessary  to  accompany  the  present  history  of  the  origin  and  pro- 
gress of  the  Bank  of  England. 

*  In  England,  for  234  years  after  the  Norman  conquest,  a  pound  in  money  was  also 
a  pound  in  weight ;  or,  which  is  the  same  thing,  a  pound  weight  of  silver  was  coined 
into  20  shillings.  In  the  reign  of  Edward  I.  the  standard  was,  for  the  first  time, 
changed,  and,  having  been  once  violated,  it  was  gradually  debased,  imtil,  in  IGOl, 
in  the  reign  of  Queen  Elizabeth,  62  shillings  were  coined  out  of  a  pound.  This  was 
a  redaction  of  above  two-thirds  in  the  standard ;  so  that  all  the  stipulations  in  con- 
tracts entered  into  in  the  reigns  immediately  subsequent  to  the  conquest  might,  in 
1601,  and  since,  be  legally  discharged  by  the  payment  of  less  than  one-third  of  the 
sum  that  had  been  really  bargained  for.  And  yet  the  standard  has  been  less  de- 
graded in  England  than  in  any  other  country.  In  France,  the  livre,  or  pound  in 
tale,  contained,  in  the  reign  of  Charlemagne,  precisely  a  poimd  weight  of  pure  silver ; 
but,  by  successive  degradations,  it  contained,  at  the  commencement  of  the  French 
revolution,  only  one-sixth  of  an  ounce,  or  one  seventy-second  part  of  a  pound  of 
silver.  In  Scotland  the  jiound  weight  of  silver,  which  had,  previously  to  1296, 
been  coined  into  one  pound  or  20  shillings,  was  in  1601  coined  into  30  pounds  or 
720  shillings.  The  Spanish  coin,  called  a  maravedi,  which,  in  1220,  weighed  84 
grains  of  gold,  and  of  course  must  have  been  worth  about  14  shillings  of  our  pres- 
ent money,  is  now  become  a  small  copper  coin,  equal  only  to  about  43-2'72  of  au 
English  penny. — Edinburgh  Review,  July,  1821,  p.  469. 


APPENDIX. 


BANK  SHARES,   BANK  DIVIDENDS,   CONSOLS, 

Tabular  Statement,  showing  the  lowest  and  highest  market  rate  of  the 
Bank  of  England  shares,  from  1731  to  1860;  the  rate  of  hank  divi- 
dends semi-annually  during  the  same  period,  and  the  lowest  and  highest 
prices  of  consols  during  each  year  : 


Sa7ik  Shares. 

£ank  Dividends. 

Co« 

sols. 

> —     t 

Loicest. 

Highest. 

March. 

Septem. 

Lowest. 

Highest 

1731,... 

.      •  . 

,  , 

3 

2|    .. 

94 

99 

1732,... 

109 

152 

3 

2f    .. 

96 

101 

1733,... 

130 

151 

2f 

2f    .. 

92 

103 

1734,... 

132 

140 

2f 

2f    .. 

90 

94 

1735,... 

138 

146 

...    2f 

2f    .. 

92 

98 

1736,... 

148 

151 

2f 

2f 

..   100 

103 

1737,... 

142 

151 

...    2f 

2f    .. 

105 

107 

1738,... 

140 

145 

2J 

2f    .. 

..   102 

106 

1739,... 

115 

144 

2f 

2f    .. 

97 

105 

1740,... 

138 

144 

2| 

2|    .. 

98 

101 

1741,... 

135 

143 

2f 

2f    .. 

98 

101 

1742,... 

136 

143 

2f 

2f    .. 

98 

102 

1743,... 

145 

148 

2f 

2f 

..   100 

103 

1744,... 

116 

148 

2f 

2f    .. 

90 

99 

1745,... 

133 

147 

2f 

2f    .. 

85 

92 

1746,... 

125 

136 

2t 

2f 

75 

89 

1747,... 

119 

129 

...    2^ 

2i    .. 

81 

86 

1748,... 

117 

129 

...    2i 

2i    .. 

76 

91 

1749,... 

128 

140 

...    2i 

2i    .. 

91 

102 

1750,... 

131 

136 

...    2i 

2i    .. 

98 

101 

1751,... 

135 

142 

...    2i 

2i    .. 

97 

103 

1752,... 

141 

149 

...    2i 
April. 

2i    .. 
October. 

..   101 

106 

1753,... 

135 

144 

...    2i 

2i    .. 

..   104 

105 

1754,... 

130 

135 

2i 

2i 

102 

104 

1755,... 

119 

162 

....    2i 

2i    .. 

90 

101 

1756,... 

114 

121 

. . . .    2i 

2i    .. 

88 

90 

1757,... 

115 

120 

...    2i 

2i    .. 

86 

91 

1758,... 

116 

123 

2i 

2i 

89 

98 

1759,.  .. 

109 

123 

...    2i 

2i    .. 

79 

88 

1760,... 

101 

114 

. . . .    2i 

2i    .. 

76 

83 

1761,... 

98 

116 

. . . .    2i 

2i:    .. 

66 

88 

1762,... 

91 

119 

. . . .    2i 

2i    .. 

63 

87 

312  History  of  the  Bank  of  England. 


Bank  Shares. 

Bank  Dividends. 

Conaoh 

i. 

Lowest. 

Highest. 

April. 

October. 

Lowest.     Highest. 

nes,.... 

Ill 

131 

2i 

2i    . 

82 

96 

1'764,..., 

112 

127 

2i 

2i 

80 

86 

17G5, 

126 

136 

U 

2i 

85 

91 

1766, 

135 

139 

2| 

2i 

87 

90 

1Y6V,.... 

142 

159 

2i 

2f 

87 

91 

1768, 

158 

190 

2f 

2f 

88 

93 

1769, 

149 

175 

2| 

21    . 

84 

89 

1770,.... 

105 

153 

2f 

21    . 

78 

87 

1771,.... 

134 

155 

2f 

21 

81 

88 

1772,.... 

144 

153 

2| 

n 

87 

95 

1773,..,. 

139 

143 

2f 

2J 

86 

87 

1774 

139 

146 

2| 

2f 

86 

89 

1775,.... 

141 

146 

2i 

21 

87 

90 

1776,.... 

134 

143 

2i 

2f 

81 

90 

1777 

128 

138 

2| 

21    . 

76 

80 

1778,.... 

107 

120 

2f 

2f 

61 

72 

1779,.... 

106 

118 

2f 

2f 

59 

64 

1780, 

109 

116 

2i 

2f 

60 

63 

1781,.... 

105 

119 

2i 

3 

56 

59 

1782 

109 

124 

3 

3 

63 

61 

1783 

112 

134 

3 

3 

58 

68 

1784,.... 

110 

118 

3 

3 

54 

57 

1785 

111 

142 

3 

3 

55 

71 

178G 

138 

158 

8 

3 

* 

1787,.... 

145 

160 

3 

3 

69 

78 

1788, 

158 

178 

34 

H 

* 

1789 

169 

191 

3i 

H       . 

".'.    7lf 

sii 

1790, 

164 

188 

3i 

Si 

70-J- 

80| 

1791,.... 

178 

204 

3i 

H 

75| 

89f 

1792, 

171 

219 

3i 

H 

72^ 

97i 

1793,.... 

161 

180 

H 

H 

70i 

81 

1794,.... 

153 

169 

Zk 

H       ■ 

62| 

721 

1795, 

152 

180 

3j 

H 

61 

70i 

1796, 

142 

180 

3i 

H 

53i 

701 

1797,.... 

115 

146 

H 

u 

47i 

56i 

1798 

118 

138 

3i 

H 

...   47i 

58 

1799,.... 

134 

176 

..    3t 

H 

52f 

69 

1800, 

154 

175 

3  J 

H 

60 

67i 

1801,.... 

148 

190 

3i 

U 

54i 

70 

1802, 

178 

207 

3i 

H       . 

66 

79 

1803, 

136 

193 

3i 

3i   . 

50i 

73 

1804, 

146 

169 

H 

H 

53f 

58| 

1805, 

167 

197 

H 

H 

57 

62 

1806,.... 

191 

223 

3i 

u 

m 

64f 

1807, 

208 

235 

5 

5 

57f 

64f 

1808,.... 

224 

240 

5 

5 

62f 

69i 

1809,..., 

225 

288 

5 

5 

63f 

70f 

1810,..., 

273 

276 

5 

5 

63i 

71 

1811,..., 

229 

251 

5 

5 

61f 

66| 

1812,.... 

212 

232 

5 

5 

55i 

63 

1813,..., 

211 

242 

5 

5 

.  54i 

67i 

1814,..., 

234 

266 

5 

5 

...     m 

72i 

1815,..., 

219 

262 

5 

5 

531 

65f 

1816,... 

215 

262 

5 

5 

5H 

64| 

1817,..., 

220 

294 

5 

5 

62 

84i 

1818,..., 

207 

292 

5 

5 

73 

82 

1819,... 

210 

267 

5 

5 

64i 

79 

Bank  Shares,  Dividends  and  Consols. 


313 


Bank  Si 

lares. 

Bank  Dividends. 

Consols. 

Lowest. 

Highest. 

April. 

October. 

Loicest.   Highest. 

1820,... 

215 

226 

5 

5 

65f 

701 

1821,... 

221 

240 

5 

5 

68f 

78f 

1822,... 

235 

252 

5 

5 

75t 

83 

1823,... 

204 

246 

4 

4 

72 

85f 

1S24,,.. 

227 

245 

4 

4 

84f 

961 

1825,... 

196 

299 

4 

4 

75 

941 

1826,.,. 

193 

223 

4 

4 

. , .    73i 

841 

1827,... 

200 

217 

4 

4 

76f 

891 

1828,... 

203 

215 

4 

4 

80| 

88f 

1829,... 

208 

218 

4 

4 

85f 

941 

1830,... 

194 

203 

4 

4 

771 

941 

1831,... 

189 

204 

4 

4 

...    V4| 

84| 

1832,... 

185 

208 

4 

4 

,.,    81f 

85f 

1833,.., 

190 

213 

4 

4 

, , ,    84i 

91i 

1834,... 

211 

225 

4 

4 

871 

93 

1835,... 

208 

225 

4 

4 

89i 

921 

1830,.  .. 

199 

219 

4 

4 

86f 

921 

183*7,... 

203 

212 

4 

4 

m 

931 

1838,... 

201 

208 

4 

4 

90f 

951 

1839,... 

177 

206 

...    3i 

3^    . 

89i 

931 

1840,... 

156 

179 

3+ 

3i 

85f 

931 

1841,... 

157 

173 

...    3| 

3i 

87i 

901 

1842,... 

165 

173 

...  H 

31 

881 

951 

1843,.., 

172 

185 

U 

3i 

921 

971 

1844,... 

185 

211 

...    31 

3^ 

96il- 

1011 

1845,... 

199 

215 

3+ 

3f 

9l| 

lOOf 

1846,... 

199 

211 

...    Zi 

H       . 

93i 

97f 

184*7,... 

180 

206^   . 

3i 

H 

78f 

94 

1848,.,. 

183 

202 

3| 

H 

79i 

90 

1849,... 

188i 

200 

3^ 

31 

85| 

97f 

1850,... 

203 

216 

...    3i 

34 

93 

98f 

1851,... 

210 

216^ 

...  H 

gx 

95f 

991 

1852,... 

215| 

234f   , 

...    3^ 

4" 

951 

lOlf 

1853,... 

208 

230^   . 

4 

4 

90f 

101 

1854,... 

204+ 

221 

4 

4 

851 

961 

1855,... 

207" 

218 

4 

4 

861 

931 

1856,.  .. 

207 

220 

4 

4 

90 

96 

1857,... 

209 

222 

4 

4 

871 

941 

1858,... 

217 

230 

...    4i 

4J 

94f 

98^ 

1859,.. 

215 

231 

...  H 

41 

93 

961 

I860,... 

225 

235^ 

u 

4^ 

921 

•951 

1861,,, 

226^ 

241 

u 

41 

891 

941 

Bonuses  on  Bank   of   England   Stock  from   1799   to   1847. 


1799,. 
1801,. 
1802,. 
1804,. 
1805,. 
1806,. 
1816,. 
1847,. 


£  10  per  cent,  on  the  capital.     In  Navy  5  per  cents. 
5         "  " 


21 
5 
5 
5 
25 
1 


In  money. 

In  Bank  Stock. 
In  money. 


314 


History  of  the  Bank  of  England. 


BANK  OF  ENGLAND  STOCK  DIVIDENDS  FROM  1694  TO  1729. 


From  1694  to  1697, 

per  cent,  per  annum,  payable 

quarterly. 

10th  September, 1698 

9th  March, 1G99 

20th  September, 1699 

25th  March, 1700 

29th  September,  ....  1700 

25th  March, 1701 

29th  September, 1701 

25th  March, 1702 

29th  September, 1702 

25th  March, 1703 

29th  September, 1703 

25th  March, 1704 

29th  September, 1704 

25th  March, 1705 

29th  September, 1705 

25th  March, 1706 

29th  September, 1706 

25th  March, 1707 

29th  September 1707 

25th  March, 1708 

29th  September, 1708 

25th  March, 1709 

29th  September, 1709 

25th  March, 1710 

29th  September,  ....  1710 

25th  March 1711 

29th  September, 1711 

25th  March, 1712 

29th  September, 1712 

25th  March, 1713 


Per  Cent. 
£8 


7 

41 

5 

H 
u 

4| 

"^i 
Vi 
9 

n 

8i 
8i 
7 

lOi 
71 
3| 
4 
4i 

H 

U 

4 

4 

3i 

U 

H 

4 
4 
4 


Per  Cent. 


29th  September,  . . . 

1713       . 

.       4 

25th  March, 

1714       . 

.       4 

29th  September,  . . . 

1714       . 

.       4 

25th  March, 

1715       . 

.       3f 

29th  September,  . . . 

1715       . 

4 

25th  March, 

1716       . 

.       4 

29th  September, . . . 

1716       . 

.       4 

25th  March, 

1717       . 

.       4 

29th  SeiJtember,  . . . 

1717       . 

.       4 

25th  March, 

1718       . 

4 

29th  September,  . . . 

1718 

.       4 

25th  March, 

1719       , 

.       4 

29th  September,  . . . 

1719       . 

.      H 

25th  March, 

1720       . 

.      H 

29th  September,  . . . 

1720       . 

.       4 

25th  March, 

1721 

.       3 

29th  September,  . . . 

1721       . 

3 

25th  March, 

1722       . 

.       3 

29th  September,  . . . 

1722       . 

.       3 

25th  Marclk, 

1723 

.       3 

29th  September, . . . 

1723 

3 

25th  March, 

1724       . 

3 

29th  September,  , . . 

1724       . 

3 

25th  March, 

1725       . 

3 

29th  September,.  .. 

1725       , 

3 

25th  March, 

1726       . 

3 

29th  September,  . , . 

1726 

3 

25th  March, 

1727       . 

o 

29th  September,  . . . 

1727       . 

'.       3 

25th  March, 

1728       . 

.       2f 

29th  September,  . . . 

1728       . 

.       2| 

25th  March, 

1729 

.       2f 

29th  September, . . . 

1729       . 

•       2| 

The  bank  dividends  vrhich,  from  1788  to  1806,  were  steady  at  seven 
per  cent.. per  annum,  indicated,  in  the  year  1807,  the  large  profits  made 
bv  means  of  the  enlarged  business  of  the  bank,  the  loans  having  increased 
in  bulk  from  £16,838,000  in  1797  to  £44,558,000  in  the  year  1815.  From 
1807  to  1822,  the  dividends  declared  were  regularly  ten  per  cent,  per 
annum,  instead  of  six  or  seven;  and  from  1799  to  1816,  (under  suspen- 
sion all  the  time,)  the  bonuses  or  extra  dividends  were  57|-  per  cent.,  or 
£57  10s.  to  each  £100  share.     {See  page  313.) 

The  market  price  of  shares  which,  in  1797,  had  declined  to  115  @  146, 
advanced  in  1809  and  1817  to  288  @  294. 


London  Joint-Stock  Banks. 


315 


THE  LONDON  JOINT-STOCK   BANKS. 

The  increase  in  the  number  and  business  of  the  joint-stock  banks  of  Lon- 
don since  1838  has  been  remarkable.  Banking  operations  for  the  year  1861, 
in  London,  have  been  steady,  safe  and  profitable.  That  the  latter  has  been 
the  case  is  abundantly  shown  by  the  recent  reports  of  these  establishments, 
for  they  all  seem  to  have  partaken  of  the  general  prosperity.  The  most 
remarkable  statement  is  that  exhibited  by  the  London  and  Westminster 
Bank,  whose  report  shows  a  gross  profit  for  the  half-year  of  no  less 
than  £167,510.  The  directors  have  declared  a  dividend  and  bonus  at 
the  rate  of  24  per  cent,  per  annum  on  a  capital  of  £1,000,000.  The 
London  Joint-Stock  Bank  also  declared  a  dividend  and  bonus  equal  to  25 
per  cent,  per  annum  on  a  capital  of  £600,000.  Assuming  that  these 
profits  continue  for  only  four  years,  the  original  shareholders  of  the  Lon- 
don Joint-Stock  Bank  will  receive  in  that  period,  in  dividends  and 
bonuses,  an  amount  equal  to  the  whole  of  their  capital,  whilst,  at  the 
same  time,  their  joint-stock  fund  or  capital  in  the  bank  will  remain  intact. 
Such  results  are  certainly  unexampled  in  the  history  of  banking. 

It  is  not  supposed  that  the  increase  in  the  business  of  joint-stock 
banks  is  to  be  attributed  solely,  or  even  mainly,  to  the  removal  of  accounts 
to  them  from  previously  existing  establishments.  It  arises  mainly  from 
the  creation  of  new  banking  business  through  the  extended  operations  of 
commerce.  We  cannot  better  illustrate  this  than  by  shoAving,  in  a  tabular 
form,  the  gradual  increase  of  the  deposits  and  current  accounts  in  the 
metropolitan  joint-stock  banks  from  their  foundation,  to  the  31st  of  De- 
cember, 1861  : 


Tears. 


1884,. 
1835,. 
1886,. 
1837,. 
1838,. 
1839,. 
1840,. 
1841,. 
1842,. 
1848,. 
1844,. 
1845,. 
1846,, 
1847,, 
1848,, 
1849,. 
1850,, 
1851,, 
1852,, 
1S53, 
1854, 
1855, 
1856, 
1857, 
1858,, 
1859, 
1860, 
1861, 


London  I   London   1  London 
and  WestA    Joint-  and 

minster.  \    Stock.        County. 


£ 

180,380 
266,884 
643,332 
793,148 
1,387,855 
1,266,845 
1,361,545 
1,499,328 
2,087,757 
2,209,624 
2,676,741 
3,590,014 
3,280,364 
2,7;i3,758 
3,089,659 
3,680,623 
3,969,648 
4,677,298 
5,581,706 
6,259,540 
7,177,244 
8,744,095 
11,438,461 
13,889,021 
11,465,815 
11,115,697 
12,484,454 
15,334,785 


594,101 
1,145,421 
1,035,088 
1,170,893 
1,403,188 
1,771,739 
2,046,285 
2,245,330 
2,460,475 
2,446,017 
1,971,912 
2,328,056 
2,792,507 
2,949,869 
8,157,575 
3,591,506 
5,010,623 
6,161,154 
6,241,594 
7,224,527 
10,737,580 
9,367,722 
9,556,797 
10,562,658 
11,381,757 


186,477 

351,275 

437,995 

581,279 

858,802 

996,082 

1,231,412 

1,489,788 

1,588,585 

1,225,120 

1,354,730 

1,675,494 

2,030,238 

2,465,768 

3,281,603 

3,417,130 

3,779,944 

4,443,859 

3,543,824 

3,533,425 

4,264,126 

4,975,029 

5,532,614 

6,909,629 


Union. 


377,755 

503,550 

745,988 

956,467 

1,591,230 

2,012,548 

2,170,810 

2,510,064 

2,644,728 

2,835,617 

2,963,583 

3,094,316 

4,268,438 

4,878,731 

7,031,477 

8,363,460 

9,045,606 

9,645,913 

10,146,365 

9,318,391 

10,852,703 

11,795,231 


Coinmer 
cial. 


168,' 
246, 
216, 
289, 
500, 
440, 
409, 
406, 
541, 
612, 
764: 
964: 
1,246 
1,26a 
1,817, 
1,536 
821, 
902. 
926, 
90S, 


City. 


Bank  of 
London. 


1,749,747 
2,222,976 
2,468,560 
3,206,781 


944,475 
1,388,933    1,114,846 


1,300,902 
1,599,140 
1,697,389 
1,927,907 


Unity 


189, 
106, 
140, 
136, 
177 


744 
718 
734 
179 
,263 


316 


History  of  the  Bank  of  England. 


These  banks  in  1860  were  eight  in  number,  but  now  reduced  to  seven, 
the  Commercial  Bank  having  been  merged  in  the  London  and  Westmin- 
ster Bank. 

The  whole  are  as  follow : 


Commenced. 
London  and  Westminster  Bank, .  1834 
London  and  Joint-Stock  Bank,. . .      1837 

London  and  County  Bank, 1838 

Union  Bank, 1840 


Commenced. 

Commercial  Bank, 1841 

City  Bank, 1856 

Bank  of  London, 185*7 

Unitv  Bank, 185Y 


The  constant  growth  of  these  establishments  appears  clearly  enough, 
from  even  a  cursory  glance  at  the  figures.  It  will  be  seen  that  in  every 
instance  (except,  of  course,  the  Commercial  Bank,  which  is  defunct,)  the 
sums  now  lodged  exhibit  a  large  increase  over  every  former  period.  The 
aggregate  in  the  seven  banks  is  now  £50,783,353,  being  £7,548,496 
more  than  at  the  corresponding  period  of  the  previous  year.  The  an- 
nexed statement  shows  at  a  glance  the  proportion  in  which  the  increase 
has  been  distributed  to  each  bank  : 


London  and  Westminster, . 
London  and  Joint-Stock, .  . 

London  and  County, 

Union, 

City, 

Bank  of  London, 

Unity, 


Dec.  31,1  S61. 

£  15,384,785 

11,381,757 

6,909,629 

11,795,231 

3,206,781 

1,927,907 

177,263 


Total, £50,783,353 


Dec.  30,  ISGO. 

£  12,484,454 

10,562,658 

5,532,614 

10,352,703 

2,468,560 

1,697,389 

136,179 

£  43,234,857 


Increase. 

£  2,900,331 

819,099 

1,377,015 

1,442,528 

738,221 

230,518 

41,084 

£  7,548,496 


These  fifty  millions  of  deposits  form  a  vast  and  almost  new  money 
power,  the  application  of  which  must  be  watched  with  the  greatest  pos- 
sible care,  from  the  powerful  and  increasing  influence  which  it  exercises 
upon  the  welfare  of  the  body  commercial. 

This  increase  may  be  further  illustrated  by  the  following  table,  showing 
the  number  of  banks,  and  their  aggregate  deposits  at  intervals  of  five 
years,  with  the  deposits  of  the  Bank  of  England  for  the  same  period  : 


2>^o.  of  Joint- 
Stock  £anks. 


1835,. 
1840,. 
1845,. 
1850,. 
1855,. 
1861,. 


Joint-Stock 
Deposits. 

£266,000 
3,348,000 
10,053,000 
12,525,000 
29,109,000 
50,783,000 


Bank  of  England  Deposits. 

.    £10,071,000 

February,       6,556,000 
June,  16,500,000 

January,       20,000,000 
September,  19,600,000 


In  April,  1860,  afraud  of  £263,000  upon  the  Union  Bank  of  London, 
by  William  George  Pullinger,  one  of  its  cashiers,  Avas  discovered. 


Circulation^  Deposits,  Loans,  d'c,  of  ike  Bank. 


317 


TABULAR   STATEMENT 


Showing  the  Circulation,  Deposits,  Loans,  Bullion  Reserve,  and  Rest 
(Surplus  Profits)  of  the  Bank  of  England  at  the  close  of  February, 
each  year,  from  1778  to  1840,  and  at  the  end  of  March,  from  1841  to 
1844. 

Liabilities.  Assets. 


Circulation.  Deposits. 

1778 £7,440,000  £4,662,000 

1779, 9,013,000  4,358,000 

1780, 8,411,000  4,724,000 

1781 7,092,000  5,797,000 

1782, 8,029,000  6,130,000 

1783, 7,675,000  4,465,000 

1784, 6,203,000  3,904,000 

1785, 5,923,000  6,669,000 

1786, 7,582,000  6,152,000 

1787, 8,330,000  5,902,000 

1788, 9,561,000  5,177,000 

1789, 9,807,000  5,537,000 

1790, 10,041,000  6,223,000 

1791, 11,439,000  6,365,000 

1792, 11,307,000  5,523,000 

1793, 11,889,000  5,346,000 

1794, 10,744,000  7,892,000 

1795, 14,018,000  5,973,000 

1796, 10,730,000  5,702,000 

1797, 9,675,000  4,892,000 

1798, 13,096,000  6,149,000 

1799, 12,960,000  8,132,000 

1800, 16,844,000  7,063,000 

1801, 16,213,000  10,746,000 

1802, 15,187,000  6,858,000 

1803, 15,320,000  8,050,000 

1804, 17,078,000  8,677,000 

1803, 17,871,000  12,084,000 

1806, 17,730,000  9,981,000 

1807, 16,951,000  11,829,000 

1808, 18,189,000  11,962,000 

1809, 18,543,000  9,983,000 

1810 21,020,000  12,457,000 

1811, 23,360,000  11,446,000 

1812 23,408,000  11,595,000 

1813, 23,211,000  11,268,000 

1814, 24,801,000  12,455,000 

1815, 27,262,000  11,702,000 

1816 27,013,000  12,389,000 

1817, 27,398,000  10,826,000 

1818, 27,771,000  7,998,000 

1819, 25,127,000  6,413,000 

1820, 23,484,000  4,094,000 

1-821, 23,885,000  5,623,000 

1822, 18,665,000  4,690,000 

1823, 18,392,000  7,181,000 

1824, 1 9,737,000  10,098,000 

21 


Loans. 

£11,221,000 
10.936,000 
10,901,000 
11,186,000 
13,794,000 
12,796,000 
11,619,000 
12,173,000 
10,353,000 
11,359,000 
11,865,000 
10,961,000 
10,332,000 
12,603,000 
13,069,000 
16,005,000 
14,625,000 
16,811,000 
17,140,000 
16,838,000 
16,800,000 
17,039,000 
21,424,000 
26,425,000 
21,960,000 
23,915,000 
26,999,000 
28,661,000 
26,591,000 
27,408,000 
27,384,000 
29,118,000 
35,379,000 
37,122,000 
38,026,000 
37,931,000 
41,990,000 
44,558,000 
43,401,000 
34,279,000 
30,905,000 
31,455,000 
26,187,000 
20,796,000 
15,973,000 
18,320,000 
18,872,000 


Bullion. 

£2,011,000 
3,711,000 
3,581,000 
3,280,000 
2,158,000 
1,321,000 
6,556,000 
2,740,000 
5,979,000 
5,627,000 
5,743,000 
7,229,000 
8,633,000 
7,869,000 
6,468,000 
4,011,000 
6,987,000 
6,127,000 
2,539,000 
1,086,000 
5.829,000 
7,564,000 
6,144,000 
4,640,000 
4,153,000 
3,777,000 
3,372,000 
5,884,000 
5,987,000 
6,143,000 
7,855,000 
4,489,000 
3,501,000 
3,350,000 
2,983,000 
2,884,000 
2,204,000 
2,037,000 
4,641,000 
9,681,000 
10,055,460 
4,185,000 
4,911,000 
11,870,000 
11,057,000 
10,384,000 
13,810,000 


/Surplus. 

£  1,129,000 
1,276,000 
1,347,000 
1,577,000 
1,793,000 
1,977,000 
2,168,000 
2,321,000 
2,599,000 
2,754,000 
2,870,000 
2,845,000 
2,701,000 
2,668,000 
2,706,000 
2,781,000 
2,876,000 
2,949,000 
3,248,000 
3,358,000 
3,384,000 
3,511,000 
3,661,000 
4,106,000 
4,068.000 
4,321,000 
4,616,000 
5,590,000 
4,867,000 
4,771,000 
5,089,000 
5,081,000 
5,403,000 
5,667,000 
6,006,000 
6,336,000 
6,937,000 
7,632,000 
8,640,000 
5,736,000 
5,192,000 
4,100,000 
3,521,000 
3,158,000 
3,675,000 
3,131,000 
2,847,000 


318 


History  of  the  Bank  of  England. 


LlAIlILITIES. 

Circulation.        Deposits. 

1825, £20,754,000  £10,109,000 

1826, 25,468,000  6,936,000 

1827, 21,891,000  8,802,000 

1828, 21,981,000  9,198,000 

1829, 19,871,000  9,554,000 

1830, 20,051,000  10,763,000 

1831, 19,600,000  1 1,214,000 

1832 18,052,000  8,937,000 

1833, 19,372,000  12,455,000 

1834, 19,050,000  13,087,000 

1835, 18,510,000  10,071,000 

1836, 18,195,000  13,985,000 

1837 18,165,()(H)  10,007,000 

1838, 18,975,0110  10,825,000 

1 839 18,098,000  7,739,000 

1840, 16,504,000  6,556,000 

1841, 16,537,000  7,212,000 

1842 10,952,000  8,657,000 

1843 20,093,000  12,003,000 

1844, 21,122,000  13,972,000 


Loans. 

£24,951,000 
32,919,000 
23,530,000 
23,581,000 
25,385,000 
24.204,000 
25,209,000 
24,333,000 
23,850,000 
25,212,000 
24,895,000 
27,208,000 
27,297,000 
21,958,000 
21,741,000 
21,011,000 
22,328,000 
22,586,000 
23,830,000 
22,479,000 


Bullion.  Surplus. 

£  8.779,000  £  2,808,000 


2,400,000 

10,159,000 

10,347,000 

6,835,000 

9,171,000 

8,217,000 

5,293,000 

10,205,000 

9,225,000 

6.289,000 

7,918,000 

4,077,000 

10,471,000 

6,773,000 

4,311,000 

4,339,000 

6,125,000 

11,054,000 

15,784,000 


2,974,000 
2,996,000 
2,750,000 
2,795.000 
2,562,000 
2,612,000 
2,638,000 
2,228,000 
2,300,000 
2.603,000 
2,940,000 
3,202,000 
2,629,000 
2,677,000 
2,862,000 
2,918,000 
3,102,000 
2,788,000 
3,169,000 


The  principal  feature  in  the  preceding  tables,  wliich  chiims  tlie  con- 
sideration of  tlie  banker  and  the  legislator,  is  the  rapid  and  enormous 
increase  in  tlic  circulation  of  the  bank  and  in  its  deposits,  from  the  time 
of  suspension,  (iVOV,)  to  the  period  when  resumption  was  seriously  de- 
bated, (181G-1817.)  Thus,  the  banks,  with  an  atrgregate  circulation  of 
£9,675,000,  and  deposits  amounting  to  £4,892,000,  at  the  time  of  its 
suspension  in  1797,  added  one-third  to  the  circulation  the  next  year,  and 
nearly  seventy-five  per  cent,  during  the  third  year,  (1800.)  A  larger 
aggregate  was  reached  in  1804-1806;  the  deposits,  at  the  same  time, 
increasing  one  hundred  and  fifty  per  cent.  In  1810,  the  circulation 
reached  a  yet  larger  sum,  (£21,020,000,)  being  more  than  double  the 
amount  in  1797.  From  1811  to  1818  the  increase  continued,  until,  in  the 
latter  year,  the  amount  was  nearly  threefold  that  of  1797  ;  making,  with 
the  deposits,  in  the  year  1815,  a  combined  cash  or  demand  liability  of 
£38,962,000. 

The  bullion  reserve  during  this  long  period  of  twenty  years  had  ranged 
from  £1,086,000  (1797)  to  £7,855^,000,  (1808,)  and  finally  reached 
£9,681,000  in  1817,  at  the  expiration  of  twenty  years. 


A  Chapter  by  T.  B.  Macaulay.  319 

THE    ORIGIN    OF    THE    BANK    OF    ENGLAND. 
By  T,  Babington  Macallay. 

From  Macaulat's  fourth  volume  of  the  History  of  England. 

I.  Financial  Difficulties  of  the  Year  1693.  II.  The  Lottekt  Loan.  III.  Peivate  Bank- 
ers OF  THE  Seyenteentu  Centurt.  IV.  Opposition  to  the  Private  Banking  System. 
V.  First  Suggestions  foe  a  National  Bank.  VI.  The  Land  Bank.  VII.  Insecurity 
OF  Land  as  a  Basis  of  Currency.  VIII.  William  Paterson,  the  Originator  of  the 
Bank  of  England.  IX.  IIis  Plan  for  a  Bank.  X.  Consu-mmation  of  the  Act — its  com- 
plete success. 

Meanwhile  the  Commons  were  busied  with  financial  questions  of 
grave  importance.  The  estimates  for  the  year  1094  were  enormous. 
The  king  proposed  to  add  to  the  regular  army,  already  the  greatest  regu- 
lar army  that  England  had  ever  supported,  four  regiments  of  dragoons, 
eight  of  horse,  and  twenty-five  of  infantry.  The  whole  number  of  men, 
officers  included,  would  thus  be  increased  to  about  ninety-four  thousand. 
Cromwell,  while  holding  down  three  reluctant  kingdoms,  and  making 
vigorous  war  on  Spain  in  Europe  and  America,  had  never  had  two-thirds 
of  the  military  force  which  William  now  thought  necessary.  The  great 
body  of  the  Tories,  headed  by  three  Whig  chiefs,  Harley,  Foley  and 
Howe,  opposed  any  augmentation.  The  great  body  of  the  Whigs,  head- 
ed by  Montague  and  Wiiartox,  would  have  granted  all  that  was  asked. 
After  many  long  discussions,  and  probably  many  close  divisions,  in  the 
Committee  of  Supply,  the  king  obtained  the  greater  part  of  what  he  de- 
manded. The  House  allowed  liim  four  new  regiments  of  dragoons,  six 
of  horse,  and  fifteen  of  infantry.  The  whole  number  of  troops  voted  for 
the  year  amounted  to  eighty-three  thousand,  the  charge  to  more  than 
two  millions  and  a  half,  including  about  two  hundred  thousand  pounds 
for  the  ordnance. 

The  naval  estimates  passed  much  more  rapidly  ;  for  Whigs  and  Tories 
agreed  in  thinking  that  the  maritime  ascendancy  of  England  ought  to  be 
maintained  at  any  cost.  Five  hundred  thousand  pounds  were  voted  for 
paying  the  arrears  due  to  seamen,  and  two  millions  for  the  expenses  of 
the  year  1694. 

The  Commons  then  proceeded  to  consider  the  Ways  and  Means.  The 
land  tax  was  renewed  at  four  shillings  in  the  pound  ;  and  by  this  simple 
but  powerful  machinery  about  two  millions  were  raised  with  certainty  and 
dispatch.  A  poll-tax  was  imposed.  Stamp  duties  had  long  been  among 
the  fiscal  resources  of  Holland  and  France,  and  had  existed  here  during 
part  of  the  reign  of  Charles  II.,  but  had  been  suffered  to  expire.  They 
were  now  revived  ;  and  they  have  ever  since  formed  an  important  part  of 
the  revenue  of  the  State.  The  hackney-coaches  of  the  capital  were  taxed, 
and  were  placed  under  the  government  of  commissioners,  in  spite  of  the 
resistance  of  the  wives  of  the  coachmen,  who  assembled  round  Westmin- 
ster Hall  and  mobbed  the  members.     But,  notwithstanding  all  these  expe- 


320  History  of  the  Bank  of  Enrjland, 


dients,  there  was  still  a  large  deficiency  ;  and  it  was  again  necessary  to 
borrow.  A  new  duty  on  salt  and  some  other  imposts  ot"  less  importance 
were  set  apart  to  form  a  fund  for  a  loan.  On  the  security  of  this  fund  a 
million  Avas  to  be  raised  by  a  lottery,  but  a  lottery  which  had  scarcely 
any  thing  l)ut  the  name  in  common  with  the  lotteries  of  a  later  period. 
The  sum  to  be  contributed  was  divided  into  a  hundred  thousand  shares 
of  ten  pounds  each.  The  interest  on  each  share  was  to  be  twenty  shil- 
lings annually,  or,  in  other  words,  ten  per  cent.,  during  sixteen  years. 
But  ten  per  cent,  for  sixteen  years  was  not  a  bait  which  was  likely  to 
attract  lenders.  An  additional  lure  was,  therefore,  held  out  to  capitalists. 
On  one  fortieth  of  the  shares  much  higher  interest  was  to  be  paid  than  on 
the  other  thirty-nine  fortieths.  Which  of  the  shares  should  be  prizes  was 
to  be  determined  by  lot.  The  arrangements  for  the  drawing  of  the  tick- 
ets were  made  by  an  adventurer  of  the  name  of  Neale,  who,  after  squan- 
dering away  two  fortunes,  had  been  glad  to  become  groom  porter  at  the 
palace.  Ilis  duties  were  to  call  the  odds  when  the  court  played  at 
hazard,  to  provide  cards  and  dice,  and  to  decide  any  di>putc  which  might 
arise  on  the  bowling-green  or  at  the  gaming-table.  He  was  eminently 
skilled  in  the  business  of  this  not  very  exalted  post,  and  had  made  such 
sums  by  raffles  that  he  was  able  to  engage  in  very  costly  speculations,  and 
was  then  covering  the  ground  round  the  Seven  Dials  with  buildings. 
He  was  probably  the  best  adviser  that  could  have  been  consulted  about 
the  details  of  a  lottery.  Yet  there  were  not  wanting  persons  who  thought 
it  hardly  decent  in  the  Treasury  to  call  in  the  aid  of  a  gambler  by  pro- 
fession. 

By  the  lottery  loan,  as  it  was  called,  one  million  was  obtained.  But 
another  million  was  wanted  to  bring  the  estimated  revenue  for  the  year 
1694  up  to  a  level  with  the  estimated  expenditure.  The  ingenious  and 
enterprising  Montague  had  a  plan  ready,  a  plan  to  which,  except  under 
the  pressure  of  extreme  pecuniary  difficulties,  he  might  not  easily  have 
induced  the  Commons  to  assent,  but  which,  to  his  large  and  vigorous 
mind,  appeared  to  have  advantages,  both  commercial  and  political,  more 
important  than  the  immediate  relief  to  the  finances.  He  succeeded,  not 
only  in  supplying  the  wants  of  the  State  for  twelve  months,  but  in  creat- 
ing a  great  institution,  which,  after  the  lapse  of  more  than  a  century  and 
a  half,  continues  to  flourish,  and  which  he  lived  to  see  the  stronghold, 
through  all  vicissitudes,  of  the  Whig  party,  and  the  bulwark,  in  danger- 
ous times,  of  the  Protestant  succession. 

In  the  reign  of  William  old  men  were  still  living  who  could  remem- 
ber that  there  was  not  a  single  banking-house  in  the  city  of  London. 
So  late  as  the  time  of  the  Restoration  every  trader  had  his  own  strong- 
box in  his  own  house,  and,  when  an  acceptance  was  presented  to  him, 
told  down  the  crowns  and  Caroluses  on  his  own  counter.  But  the  in- 
crease of  wealth  had  produced  its  natural  efl:ect,  the  subdivision  of  labor. 
Before  the  end  of  the  reign  of  Charles  H.,  a  new  mode  of  paying  and 
receiving  money  had  come  into  fashion  among  the  merchants  of  the  capi- 
tal. A  class  of  agents  arose,  whose  office  was  to  keep  the  cash  of  the 
commercial  houses.  This  new  branch  of  business  naturally  fell  into  the 
hands  of  the  goldsmiths,  who  were  accustomed  to  traffic  largely  in  the  pre- 
cious metals,  and  who  had  vaults  in  which  great  masses  of  bullion  could 


A  Chapter  hy  T.  B.  Macaulat.  321 

lie  secure  from  fire  and  from  robbers.  It  was  at  tlie  sLops  of  the  gold- 
smiths of  Lombard-street  that  all  the  payments  in  coin  were  made. 
Other  traders  gave  and  received  nothing  but  paper. 

Tliis  great  change  did  not  take  place  without  much  opposition  and 
clamor.  Old-fashioned  merchants  complained  bitterly  that  a  class  of  men 
who,  thirty  years  before,  had  confined  themselves  to  their  proper  func- 
tions, and  had  made  a  fair  profit  by  embossing  silver  bowls  and  chargers, 
by  setting  jewels  for  fine  ladies,  and  by  selling  pistoles  and  dollars  to  gen- 
tlemen setting  out  for  the  continent,  had  become  the  treasurers,  and 
were  fast  becoming  the  masters,  of  the  whole  city.  These  usurers,  it  was 
said,  played  at  hazard  with  what  had  been  earned  by  the  industry  and 
hoarded  by  the  thrift  of  other  men.  If  the  dice  turned  up  well,  the 
knave  who  kept  the  cash  became  an  alderman  ;  if  they  turned  up  ill,  the 
dupe  who  furnished  the  cash  became  a  bankrupt.  On  the  other  side, 
the  conveniences  of  the  modern  practice  were  set  forth  in  animated  lan- 
guage. The  new  system,  it  was  said,  saved  both  labor  and  money.  Two 
clerks,  seated  in  one  counting-house,  did  what,  under  the  old  system, 
must  have  been  done  by  twenty  clerks  in  twenty  difterent  establishments. 
A  goldsmith's  note  might  be  transferred  ten  times  in  a  morning ;  and 
thus  a  hundred  guineas,  locked  in  his  safe,  close  to  the  exchange,  did 
what  would  formerly  have  required  a  thousand  guineas,  dispersed  through 
many  tills,  some  on  Ludgate  Hill,  some  in  Austin  Friars,  and  some  in 
Tower-street.* 

Gradually,  even  those  who  had  been  loudest  in  murmuring  against  the 
innovation,  gave  way  and  conformed  to  the  prevailing  usage.  The  last 
person  who  held  out,  strange  to  say,  was  Sir  Dudley  North.  When,  in 
1680,  after  residing  many  years  abroad,  he  returned  to  London,  nothing 
astonished  or  displeased  him  more  than  the  practice  of  making  payments 
by  drawing  bills  on  bankers.  He  found  that  he  could  not  go  on  'Change 
without  being  followed  round  the  piazza  by  goldsmiths,  who,  with  low 
bows,  begged  to  have  the  honor  of  serving  him.  He  lost  his  temper 
when  his  friends  asked  where  he  kept  his  cash.  "  Where  should  I  keep 
it,"  he  asked,  "  but  in  my  own  house  ?"  With  diflSculty  he  was  induced 
to  put  his  money  into  the  hands  of  one  of  the  Lombard-street  men,  as 
they  were  called.  Unhappily,  the  Lombard-street  man  broke,  and  some 
of  his  customers  suff"ered  severely.  Dudley  North  only  lost  fifty 
pounds;  but  this  loss  confirmed  him  in  his  dislike  of  the  whole  mys- 
tery of  banking.  It  was  in  vain,  however,  that  he  exhorted  his  fellow- 
citizens  to  return  to  the  good  old  practice,  and  not  to  expose  themselves 
to  utter  ruin  in  order  to  spare  themselves  a  little  trouble.  He  stood 
alone  against  the  whole  community.  The  advantages  of  the  modern 
system  were  felt  every  hour  of  every  day  in  every  part  of  London  ;  and 
people  were  no  more  disposed  to  relinquish  those  advantages  for  fear  of 
calamities  which  occurred  at  long  intervals,  than  to  refrain  from  building 
houses  for  fear  of  fires,  or  from  building  ships  for  fear  of  hurricanes.     It 


*  See,  for  example,  the  "  Mystery  of  the  New-fashioned  Goldsmiths  or  Brokers, 
IG'ze  ;"  "  Is  not  the  hand  of  Job  in  all  this  ?  1676  ;"  and  an  answer  published  in  the 
Bame  year.  See,  also,  "  England's  Glory  in  the  Great  Improvement  by  Banking  and 
Trade,  1694."  j  s 


•'522  History  of  the  Bank  of  England. 

is  a  curious  circumstance,  that  a  man  who,  as  a  theorist,  was  distinguished 
from  all  the  merchants  of  liis  time  by  tlie  largeness  of  his  views  and  by 
liis  superiority  to  vulgar  prejudices,  should,  in  practice,  have  been  distin- 
guished from  all  the  merchants  of  his  time  by  the  obstinacy  with  which 
he  adhered  to  an  ancient  mode  of  doing  business,  long  after  the  dullest 
and  most  ignorant  plodders  had  abandoned  that  mode  for  one  better 
suited  to  a  great  commercial  society. 

No  sooner  had  banking  becoujc  a  separate  and  important  trade,  than 
men  began  to  discuss  with  earnestness  the  question  whether  it  would  be 
expedient  to  erect  a  national  bank.  Tiic  general  opinion  seems  to  have 
been  decidedly  in  favor  of  a  national  bank ;  nor  can  we  wonder  at  this ; 
for  few  were  then  aware  that  trade  is  in  general  carried  on  to  much  more 
advantage  by  individuals  than  by  great  societies ;  and  banking  really  is 
one  of  those  few  trades  which  can  be  carried  on  to  as  much  advantage  by 
a  great  society  as  by  an  individual.  Two  public  banks  had  long  been  re- 
nowned throughout  Europe,  the  Bank  of  Saint  George,  at  Genoa,  and  the 
Bank  of  Amsterdam.  The  immense  wealth  which  was  in  the  keeping  of 
those  establishments,  the  confidence  which  they  inspired,  the  prosperity 
which  they  had  created,  their  stability,  tried  by  panics,  by  wars,  by  revo- 
lutions, and  found  proof  against  all,  were  favorite  topics.  The  Bank  of 
Saint  George  had  nearly  completed  its  third  century.  It  had  begun  to 
receive  deposits  and  to  make  loans  before  Columbus  had  crossed  the 
Atlantic,  before  Gama  had  turned  the  Cape,  when  a  Ciiristian  emperor 
was  reigning  at  Constantinople,  when  a  Mahomedan  Sultan  was  jeigning 
at  Granada,  when  Florence  was  a  Republic,  when  Ilolland  obeyed  a 
hereditary  prince.  All  these  things  had  been  changed.  New  continents 
and  new  oceans  had  been  discovered.  The  Turk  was  at  Constantinople ; 
the  Castilian  was  at  Granada  ;  Florence  had  its  hereditary  prince  ;  Hol- 
land was  a  Republic  ;  but  the  Bank  of  Saint  George  was  still  receiving 
deposits  and  making  loans.  The  Bank  of  Amsterdam  was  little  more 
than  eighty  years  old  ;  but  its  solvency  had  stood  severe  tests.  Even  in 
the  terrible  crisis  of  1672,  when  the  whole  Delta  of  the  Rhine  was  over- 
run by  the  French  armies,  Avhen  the  white  flags  were  seen  from  the  top 
of  the  Stadthouse,  there  was  one  place  where,  amidst  the  general  con- 
sternation and  confusion,  tranquillity  and  order  were  still  to  be  found  ; 
and  that  place  was  the  bank.  Why  should  not  the  Bank  of  London  be 
as  great  and  as  durable  as  the  banks  of  Genoa  and  of  Amsterdam  ? 

Before  the  end  of  the  reign  of  Charles  II.  several  plans  were  pro- 
posed, examined,  attacked  and  defended.  Some  pamphleteers  main- 
tained that  a  national  bank  ought  to  be  under  the  direction  of  the  king. 
Others  thought  that  the  management  ouojht  to  be  intrusted  to  the  lord 
mayor,  aldermen  and  common  council  of  the  capital,*  After  the  revolu- 
tion the  subject  was  discussed  with  an  animation  before  unknown.  For, 
under  the  influence  of  liberty,  the  breed  of  political  projectors  multiplied 
exceedingly.  A  crowd  of  plans,  some  of  which  resemble  the  fancies  of  a 
child,  or  the  dreams  of  a  man  in  a  fever,  were  pressed  on  the  govern- 
ment. 

*  See  a  pamphlet  entitled  "  Corporation  Credit ;  or,  a  Bank  of  Credit,  made  Cur- 
rent by  Common  Consent  in  London,  more  Useful  and  Safe  than  Money." 


A  Chapter  hj  T.  B.  Macaulay.  323 

Preeminently  conspicuous  among  the  political  mountebanks,  ^Yllose 
busy  faces  were  seen  every  day  in  the  lobby  of  the  House  of  Commons, 
were  John  Briscoe  and  Hugh  Chamberlayne,  two  projectors  worthy 
to  have  been  members  of  that  academy  which  Gulliver  found  at  Lagado. 
These  men  affirmed  that  the  one  cure  for  every  distemper  of  the  State 
was  a  land  bank,  A  land  bank  would  work  for  England  miracles  such 
as  had  never  been  wrought  for  Israel,  miracles  exceeding  the  heaps  of 
quails  and  the  daily  shower  of  manna.  There  would  be  no  taxes ;  and 
yet  the  exchequer  would  be  full  to  overflowing.  There  would  be  no 
poor  rates,  for  there  would  be  no  poor.  The  income  of  every  land-owner 
would  be  doubled.  The  profits  of  every  merchant  would  be  increased. 
In  short,  the  island  would,  to  use  Briscoe's  words,  be  the  paradise  of  the 
world.  The  only  losers  would  be  the  moneyed  men,  those  worst  ene- 
mies of  the  nation,  who  had  done  more  injury  to  the  gentry  and  yeo- 
manry than  an  invading  army  from  France  would  have  had  the  heart 
to  do.* 

These  blessed  effects  the  land  bank  was  to  produce  simply  by  issuing 
enormous  quantities  of  notes  on  landed  security.  The  doctrine  of  the 
projectors  was,  that  every  person  who  had  real  property  ought  to  have, 
besides  that  property,  paper  money  to  the  full  value  of  that  property. 
Thus,  if  his  estate  was  worth  two  thousand  pounds,  he  ought  to  have  his 
estate  and  two  thousand  pounds  in  paper  money.f  Both  Briscoe  and 
Chamberlayne  treated  with  the  greatest  contempt  the  notion  that  there 
could  be  an  over-issue  of  paper  as  long  as  there  was  for  every  ten  pound 
note  a  piece  of  land  in  the  country  worth  ten  pounds.  Nobody,  they 
said,  would  accuse  a  goldsmith  of  over-issuing  as  long  as  his  vaults  con- 
tained guineas  and  crowns  to  the  full  value  of  all  the  notes  which  bore 
his  signature.  Indeed,  no  goldsmith  had  in  his  vaults  guineas  and  crowns 
to  the  full  value  of  all  his  paper.  And  was  not  a  square  mile  of  rich  land 
in  Taunton  Dean  at  least  as  well  entitled  to  be  called  wealth  as  a  bag  of 


*  A  proposal  by  Dr.  Hugh  Cii.vjrBERLAYNE,  in  Essex-street,  for  a  bank  of  secure 
current  credit  to  be  founded  upon  land,  in  order  to  the  general  good  of  landed  men, 
to  the  great  increase  of  the  value  of  land,  and  the  no  less  benefit  of  trade  and  com- 
merce, 1695  ;  Proposals  for  the  supplying  their  majesties  with  money  on  easy  terms, 
exempting  the  nobility,  gentry,  etc.,  from  taxes,  enlarging  their  yearly  estates,  and 
enriching  all  the  subjects  of  the  kingdom  by  a  national  land  bank ;  by  Joun  Bris- 
coe. "Ofortunatus  nimium  bona  si  sua  norint  Anglicanos."  Third  edition,  1696. 
Briscoe  seems  to  have  been  as  much  yersed  in  Latin  literature  as  in  political 
economy. 

\  In  confirmation  of  what  is  said  in  the  text,  I  extract  a  single  paragraph  from 
Briscoe's  proposals.  "Admit  a  gentleman  hath  barely  £100  per  annum  estate  to 
live  on,  and  hath  a  wife  and  four  children  to  jirovide  for ;  this  person,  supposing 
no  taxes  were  upon  his  estates,  must  be  a  great  husband  to  be  able  to  keep  his 
charge,  but  cannot  think  of  laying  up  any  thing  to  place  out  his  children  in  the 
world ;  but  according  to  this  proposed  method  he  may  give  his  children  £500  a 
piece,  and  have  £90  per  annum  left  for  himself  and  his  wife  to  live  upon,  the  which 
he  may  also  leave  to  such  of  his  children  as  he  pleases  after  his  and  his  wife's  de- 
cease. For  first  having  settled  his  estate  of  £100  per  annum,  as  in  proposals  1,  3, 
he  may  have  bills  of  credit  for  £2,000  for  his  own  proper  use,  for  10s.  per  cent,  per 
annum,  as  in  proposal  22,  which  is  but  £10  per  annum  for  the  £2,000,  which  being 
deducted  out  of  his  estate  of  £100  per  annum,  there  remains  £90  per  annum  clear 
to  himself."     It  ought  to  be  observed  that  this  nonsense  reached  a  third  edition. 


324  History  of  the  Bank  of  England. 

gold  or  silver  ?  The  projectors  could  not  deny  that  many  people  had  a 
prejudice  in  favor  of  the  precious  metals,  and  that,  therefore,  if  the  land 
bank  were  bound  to  cash  its  notes,  it  would  very  soon  stop  payment. 
This  difficulty  they  got  over  by  proposing  that  the  notes  should  be  incon- 
vertible, and  that  every  body  should  be  forced  to  take  them. 

The  speculations  of  Chambeulayne  on  the  subject  of  the  currency 
may  possibly  find  admirers  even  in  our  own  time.  But  to  his  other 
errors  he  added  an  error  which  began  and  ended  with  him.  lie  was 
fool  enough  to  take  it  for  granted,  in  all  his  reasonings,  that  the  value  of 
an  estate  varied  directly  as  the  duration.  lie  maintained,  that  if  the 
annual  income  derived  from  a  manor  were  a  thousand  pounds,  a  grant 
of  that  manor  for  twenty  years  must  be  worth  twenty  thousand  pounds, 
and  a  grant  for  a  hundred  years  worth  a  hundred  thousand  pounds.  If, 
therefore,  the  lord  of  such  a  manor  would  pledge  it  for  a  hundred  years 
to  the  land  bank,  the  land  bank  might,  on  that  security,  instantly  issue 
notes  for  i^  hundred  thousand  pounds.  On  this  subject  Chamberlayne 
was  proof  to  ridicule,  to  argument,  even  to  arithmetical  demonstration. 
He  was  reminded  that  the  fee  simple  of  land  would  not  sell  for  more  than 
twenty  years'  purchase.  To  say,  therefore,  that  a  term  of  a  hundred 
years  was  worth  five  times  as  much  as  a  term  of  twenty  years,  was  to 
say  that  a  term  of  a  hundred  years  was  worth  five  times  the  fee  simple  ; 
in  other  words,  that  a  hundred  was  five  times  the  infinity.  Those  who 
reasoned  thus  were  refuted  by  being  told  that  they  were  usurers ;  and  it 
should  seem  that  a  large  number  of  country  gentlemen  thought  the  re- 
futation complete. 

In  December,  1693,  Chamberlayne  laid  his  plan,  in  all  its  naked  ab- 
surdity, before  the  Commons,  and  petitioned  to  be  heard.  He  confi- 
dently undertook  to  raise  eight  thousand  pounds  on  every  freehold  estate 
of  a  hundred  and  fifty  pounds  a  year  which  should  be  brought,  as  he 
expressed  it,  into  his  land  bank,  and  this  without  dispossessing  the  free- 
holder.* All  the  squires  in  the  House  must  have  known  that  the  fee 
simple  of  such  an  estate  would  hardly  fetch  three  thousand  pounds  in  the 
market.  That  less  than  the  fee  simple  of  such  an  estate  could,  by  any 
device,  be  made  to  produce  eight  thousand  pounds,  would,  it  might  have 
been  thought,  have  seemed  incredible  to  the  most  illiterate  fox-hunter 
that  could  be  found  on  the  benches.  Distress,  however,  and  animosity, 
had  made  the  landed  gentlemen  credulous.  They  insisted  on  referring 
Chamberlayne's  plan  to  a  committee  ;  and  the  committee  reported  that 


*  Commons'  Journals,  Dec.  1,  1693.  I  am  afraid  that  I  may  be  suspected  of  ex- 
aggerating the  absurdity  of  this  scheme.  I,  therefore,  transcribe  the  most  impor- 
tant part  of  the  petition.  "  In  consideration  of  the  freeholders  bringing  their  lands 
into  tliis  bank,  for  a  fund  of  current  credit,  to  be  established  by  act  of  Parliament,  it 
is  now  proposed  that,  for  every  £150  per  annum,  secured  for  one  hundred  and  fifty 
years,  for  but  one  hundred  yearly  payments  of  £100  per  annum,  free  from  all  man- 
ner of  taxes  and  deductions  whatsoever,  every  such  freeholder  shall  receive  £4,000 
in  the  said  current  credit,  and  shall  have  £2,000  more  put  into  the  fishery  stock  for 
his  proper  benefit ;  and  there  may  be  further  £2,000  reserved  at  the  Parliament's 
disposal  towards  carrying  on  this  present  war.  *  *  *  The  freeholder  is  never 
to  quit  the  possession  of  his  said  estate  unless  the  yearly  rent  happens  to  be  in 
arrear." 


A  Chapter  hy  T.  B.  Macaulay.  325 

the  plan  was  practicable,  and  would  tend  to  the  benefit  of  the  nation. 
But  by  this  time  tlie  united  force  of  demonstration  and  derision  had  be- 
gun to  produce  an  effect  even  on  the  moat  ignorant  rustics  in  the  House. 
The  report  lay  unnoticed  on  the  table  ;  and  the  country  was  saved  from 
a  calamity,  compared  with  Avhich  the  defeat  of  Landen  and  the  loss  of 
the  Smyrna  fleet  would  have  been  blessings. 

All  the  projectors  of  this  busy  time,  however,  were  not  so  absurd  as 
Chamberlayne.  One  among  them,  William  Paterson,  Avas  an  inge- 
nious, though  not  always  a  judicious,  speculator.  Of  his  early  life  little 
is  known,  except  that  he  was  a  native  of  Scotland,  and  that  he  had  been 
in  the  West  Indies.  In  what  character  he  had  visited  the  West  Indies 
was  a  matter  about  which  his  contemporaries  differed.  His  friends  said 
that  he  had  been  a  missionary  ;  his  enemies,  that  he  had  been  a  buc- 
caneer. He  seems  to  have  been  gifted  by  nature  with  fertile  invention, 
an  ardent  temperament  and  great  poAvers  of  persuasion,  and  to  have  ac- 
quired somewhere  in  the  course  of  his  vagrant  life  a  perfect  knowledge 
of  accounts. 

This  man  submitted  to  the  government,  in  1691,  a  plan  of  a  national 
bank ;  and  his  plan  was  favorably  received  both  by  statesmen  and  by 
merchants.  But  years  passed  away  ;  and  nothing  was  done,  till,  in  the 
spring  of  1694,  it  became  absolutely  necessary  to  find  some  new  mode 
of  defraying  the  charges  of  the  Avar.  Then  at  length  the  scheme  devised 
by  the  poor  and  obscure  Scottish  adventurer  Avas  taken  up  in  earnest 
by  Montague.  AVith  Montague  was  closely  allied  Michael  Godfrey, 
the  brother  of  that  Sir  Edmondsbury  Godfrey,  Avhose  sad  and  mys- 
terious death  had,  fifteen  years  before,  produced  a  terrible  outbreak 
of  popular  feeling.  Michael  was  one  of  the  ablest,  most  upright  and 
most  opulent  of  the  merchant  princes  of  London,  He  was,  as  might 
have  been  expected  from  his  near  connection  Avith  the  martyr  of  the  Pro- 
testant faith,  a  zealous  Whig.  Some  of  his  writings  are  still  extant,  and 
prove  him  to  have  had  a  strong  and  clear  mind. 

By  these  tAvo  distinguished  men  Paterson's  scheme  was  fathered. 
Montague  undertook  to  manage  the  House  of  Commons,  Godfrey  to 
manage  the  city.  An  approving  vote  Avas  obtained  from  the  Committee 
of  Ways  and  Means ;  and  a  bill,  the  title  of  Avhich  gave  occasion  to 
many  sarcasms,  Avas  laid  on  the  table.  It  Avas  indeed  not  easy  to  guess 
that  a  bill,  which  purported  only  to  impose  a  new  duty  on  tonnage  for 
the  benefit  of  such  persons  as  should  advance  money  towards  carrying 
on  the  Avar,  was  really  a  bill  creating  the  greatest  commercial  institution 
that  the  world  had  ever  seen. 

The  plan  Avas,  that  twelve  hundred  thousand  pounds  should  be  bor- 
rowed by  the  government  on  what  was  then  considered  as  the  moderate 
interest  of  eight  per  cent.  In  order  to  induce  capitalists  to  advance  the 
money  promptly  on  terms  so  favorable  to  the  public,  the  subscribers 
were  to  be  incorporated  by  the  name  of  the  Governor  and  Company  of 
the  Bank  of  England.  The  corporation  was  to  have  no  exclusive  privi- 
lege, and  was  to  be  restricted  from  trading  in'  any  thing  but  bills  of  ex- 
change, bullion  and  forfeited  pledges. 

As  soon  as  the  plan  became  generally  known,  a  paper  war  broke  out 
as  furious  as  that  between  the  swearers  and  the  non-swearers,  or  as  thai 


326  History  of  the  Bank  of  England. 

between  the  Old  East  India  Company  and  the  New  East  India  Company. 
The  projectors  who  had  failed  to  gain  the  ear  of  the  government  fell  like 
madmen  on  their  more  fortunate  brother.  All  the  goldsmiths  and 
pawnbrokers  set  up  a  howl  of  rage.  Some  discontented  Tories  predicted 
ruin  to  the  monarchy.  It  was  remarkable,  they  said,  that  banks  and 
kings  had  never  existed  together.  Banks  were  republican  institutions. 
There  were  flourishing  banks  at  Venice,  at  Genoa,  at  Amsterdam  and  at 
Hamburg.  But  who  had  ever  heard  of  a  Bank  of  France  or  a  Bank  of 
Spain  ?  Some  discontented  "Whigs,  on  the  other  hand,  predicted  ruin 
to  our  liberties.  Here,  they  said,  is  an  instrument  of  tyranny  more  for- 
midable than  the  High  Commission,  than  the  Star  Chamber,  than  even 
the  fifty  thousand  soldiers  of  Oliver.  The  whole  wealth  of  the  nation 
will  be  in  the  hands  of  the  Tonnage  Bank — such  was  the  nickname  then 
in  use — and  the  Tonnage  Bank  will  be  in  the  hands  of  the  sovereign. 
The  power  of  the  purse,  the  one  great  security  for  all  the  rights  of  Eng- 
lishmen, will  be  transferred  from  the  House  of  Commons  to  the  governor 
and  directors  of  the  new  company.  This  last  consideration  was  really 
of  some  weight,  and  was  allowed  to  be  so  by  the  authors  of  the  bill. 
A  clause  was,  therefore,  most  properly  inserted,  which  prohibited  the 
bank  from  advancing  money  to  the  crown  Avithout  authority  from  Parlia- 
ment. Every  infraction  of  this  salutary  rule  w^as*to  be  punished  by  for- 
feiture of  three  times  the  sum  advanced  ;  and  it  was  provided,  that  the 
king  should  not  have  power  to  remit  any  part  of  the  penalty.  The  plan, 
thus  amended,  received  the  sanction  of  the  Commons  more  easily  than 
might  have  been  expected  from  the  violence  of  the  adverse  clamor.  In 
truth,  the  Parliament  was  under  duress.  Money  must  be  had,  and  could 
in  no  other  way  be  had  so  easily.  What  took  place  when  the  House 
had  resolved  itself  into  a  committee  cannot  be  discovered  ;  but  while  the 
speaker  was  in  the  chair,  no  division  took  place. 

The  bill,  however,  was  not  safe  when  it  had  reached  the  Upper  House. 
Some  lords  suspected  that  the  plan  of  a  national  bank  had  been  devised 
for  the  purpose  of  exalting  the  moneyed  interest  at  the  expense  of  the 
landed  interest.  Others  thought  that  this  plan,  whether  good  or  bad, 
ought  not  to  have  been  submitted  to  them  in  such  a  form.  Whether  it 
would  be  safe  to  call  into  existence  a  body  which  might  one  day  rule  the 
whole  commercial  world,  and  how  such  a  body  should  be  constituted, 
were  questions  which  ought  not  to  be  decided  by  one  branch  of  the  le- 
gislature. -  The  peers  ought  to  be  at  perfect  liberty  to  examine  all  the 
details  of  the  proposed  scheme,  to  suggest  amendments,  to  ask  for  con- 
ferences. It  was,  therefore,  most  unfair  that  the  law  establishing  the 
bank  should  be  sent  up  as  a  part  of  a  law  granting  supplies  to  the  crown. 
The  Jacobites  entertained  some  hope  that  the  session  would  end  with  a 
quarrel  between  the  Houses,  that  the  tonnage  bill  would  be  lost,  and  that 
William  would  enter  on  the  campaign  without  money.  It  was  already 
May,  according  to  the  new  style.  The  London  season  was  over,  and 
many  noble  families  had  left  Covent  Garden  and  Soho  Square  for  their 
woods  and  hay-fields.  But  summonses  were  sent  out.  There  was  a  vio- 
lent rush  back  to  town.  The  benches  which  had  lately  been  deserted 
were  crowded.  The  sittings  began  at  an  hour  unusually  earlv,  and  were 
prolonged  to  an  hour  unusually  late.     On  the  day  on  which  the  bill  was 


.     A  Chapter  by  T.  B.  Macaulay.  327 

comrnitted  the  contest  lasted  without  intermission  from  nine  in  t"hc 
morninc;  till  six  in  the  evening.  Godolphin  was  in  the  chair.  Notting- 
ham and  Rochester  proposed  to  strike  out  all  the  clauses  which  related 
to  the  bank.  Something  was  said  about  the  danger  of  setting  up  a 
gigantic  corporation  which  might  soon  give  law  to  the  three  estates  of 
the  realm.  But  the  peers  seemed  to  be  most  moved  by  the  appeal  which 
was  made  to  them  as  landlords.  The  whole  scheme,  it  was  asserted,  was 
intended  to  enrich  usurers  at  the  expense  of  the  nobility  and  gentry. 
Persons  who  had  laid  by  money  would  rather  put  it  into  the  bank  than 
lend  it  on  mortgage  at  moderate  interest.  C.f:RMARTiiEN  said  little  or 
nothing  in  defence  of  what  was,  in  truth,  the  work  of  his  rivals  and  ene- 
mies. He  owned  that  there  were  grave  objections  to  the  mode  in  which 
the  Commons  had  provided  for  the  public  service  of  the  year.  But  would 
their  lordships  amend  a  money  bill  ?  AVould  they  engage  in  a  contest  of 
which  the  end  must  be  that  they  must  either  yield,  or  incur  the  grave 
responsibility  of  leaving  the  channel  without  a  fleet  during  the  summer  ? 
This  argument  prevailed  ;  and,  on  a  division,  the  amendment  was  rejected 
by  forty-three  votes  to  thirty-one.  A  few  hours  later  the  bill  received 
the  royal  assent,  and  the  Parliament  was  prorogued. 

In  the  city  the  success  of  Montague's  plan  was  complete.  It  was  then 
at  least  as  diflScult  to* raise  a  million  at  eight  per  cent,  as  it  would  now 
be  to  raise  thirty  millions  at  four  per  cent.  It  had  been  supposed  that 
contributions  would  drop  in  very  slowly  ;  and  a  considerable  time  had, 
therefore,  been  allowed  by  the  act.  This  indulgence  was  not  needed. 
So  popular  was  the  new  investment,  that  on  the  day  on  which  the  books 
were  opened  three  hundred  thousand  pounds  were  subscribed;  three 
hundred  thousand  more  were  subscribed  during  the  next  forty-eight 
hours  ;  and,  in  ten  days,  to  the  delight  of  all  the  friends  of  the  govern- 
ment, it  was  announced  that  the  list  was  full.  The  whole  sura  which  the 
corporation  Avas  bound  to  lend  to  the  State  was  paid  into  the  exchequer 
before  the  first  instalment  was  due.  Somers  gladly  put  the  great  seal  to 
a  charter  framed  in  conformity  with  the  terms  prescribed  by  Parliament ; 
and  the  Bank  of  England  commenced  its  operations  in  the  house  of  the 
Company  of  Grocers.  There,  during  many  years,  directors,  secretaries 
and  clerks,  might  be  seen  laboring  in  different  parts  of  one  spacious  hall. 
The  persons  employed  by  the  bank  were  originally  only  fifty-four.  They 
are  now  nine  hundred.  The  sura  paid  yearly  in  salaries  araounted  at 
first  to  only  four  thousand  three  hundred  and  fifty  pounds.  It  now  ex- 
ceeds two  hundred  and  ten  thousand  pounds.  We  may,  therefore,  fairly 
infer  that  the  incomes  of  commercial  clerks  are,  on  an  average,  about 
three  times  as  large  in  the  reign  of  Victoria  as  they  were  in  the  reign  of 
William  III. 

It  soon  appeared  that  Montague  had,  by  skilfully  availing  himself  of 
the  financial  difficulties  of  the  country,  rendered  an  inestimable  service 
to  his  party.  During  several  generations  the  Bank  of  England  was  em- 
phatically a  Whig  body.  It  was  Whig,  not  accidentally,  but  necessarily. 
It  must  have  instantly  stopped  payment  if  it  had  ceased  to  receive  the 
interest  on  the  sum  which  it  had  advanced  to  the  government ;  and  of 
that  interest  James  would  not  have  paid  one  farthing.  Seventeen  years 
after  the  passing  of  the  tonnage  bill,  Addison,  in  one  of  his  most  inge- 


32 S  History  of  the  Bank  of  England. 

nions  and  graceful  allegories,  described  the  situation  of  t]ie  great  company 
through  which  the  immense  wealth  of  London  was  constantly  circulating. 
He  saw  public  credit  on  her  throne  in  Grocers'  Hall,  the  great  charter 
over  her  head,  the  act  of  settlement  full  in  her  view,  ller  touch  turned 
every  thing  to  gold.  Behind  her  seat,  bags  filled  with  coin  were  piled 
up  to  the  ceiling.  On  her  right  and  on  her  left  the  floor  was  hid- 
den by  pyramids  of  guineas.  On  a  sudden  the  door  flies  open.  The 
Pretender  rushes  in,  a  sponge  in  one  hand,  in  the  other  a  sword  which  he 
shakes  at  the  act  of  settlement.  The  beautiful  queen  sinks  downs  faint- 
ing. The  spell  by  which  she  has  turned  all  things  around  her  into 
treasure  is  broken.  The  money-bags  shrink  like  pricked  bladders.  The 
piles  of  gold  pieces  arc  turned  into  bundles  of  rags  or  faggots  of  wooden 
tallies.*  The  truth  which  this  parable  was  meant  to  convey  was  con- 
stantly present  to  the  minds  of  the  rulers  of  the  bank.  So  closely  was 
their  interest  bound  up  with  the  interest  of  the  government,  that  the 
greater  the  public  danger  the  more  ready  were  they  to  come  to  the 
rescue.  In  old  times,  when  the  treasury  was  empty,  when  the  taxes 
came  in  slowly,  and  when  the  pay  of  the  soldiers  and  sailors  was  in  ar- 
rear,  it  had  been  necessary  for  the  chancellor  of  the  exchequer  to  go, 
hat  in  hand,  up  and  down  Cheapside  and  Cornhill,  attended  by  the  lord 
mayor  and  by  the  aldermen,  and  to  make  up  a  sum  by  borrowing  a  hun- 
dred pounds  from  this  hosier,  and  two  hundred  pounds  from  that  iron- 
monger. Those  times  were  over.  The  government,  instead  of  labori- 
ously scooping  up  supplies  from  numerous  petty  sources,  could  now  draw 
whatever  it  required  from  an  immense  reservoir,  which  all  those  petty 
sources  kept  constantly  replenished.  It  is  hardly  too  much  to  say  that, 
during  many  years,  the  weight  of  the  bank,  Avhich  was  constantly  in  the 
scale  of  the  Whigs,  almost  counterbalanced  the  weight  of  the  church, 
which  was  as  constantly  in  the  scale  of  the  Tories. 

A  few  minutes  after  the  bill  which  established  the  Bank  of  England 
had  received  the  royal  assent,  the  Parliament  was  prorogued  by  the  king 
with  a  speech,  in  which  he  warmly  thanked  the  Commons  for  their  liber- 
ality. Montague  was  immediately  rewarded  for  his  services  with  the 
place  of  chancellor  of  the  exchequer. 


*  Spectator,  No.  3. 


Description  of  the  Bank.  329 

THE   BANK   OF  ENGLAND. 
A   Visit   to    the   Bakk    of   England,    1849. 

From  Hogg's  Weekly  Instructor. 

We  are  indebted  for  tlie  following  interesting  account  of  the  internal 
economy  of  the  Bank  of  England,  to  Hogg's  Instructor — a  work  we 
have  several  times  had  occasion  to  commend  for  the  excellence  of  its  liter- 
ary contents : 

The  bank  is  one  of  the  grand  points  in  the  topography  of  London. 
Hackney-coachmen,  cabmen  and  omnibusmen  regard  it  as  amongst  the 
chief  ports  in  the  voyage  of  the  great  city,  and  draw  up  here  as  a  matter 
of  course,  to  set  down  or  take  up  their  human  freight.  The  bank  is  an 
immense  building,  situated  a  little  to  the  west  of  Cornhill,  and  covering  an 
area  of  several  acres  of  ground.  The  business  now  transacted  in  this 
extensive  edifice  was  originally  carried  on  in  Grocers'  Hall  in  the  Poultry — 
a  building  which  now  would  scarcely  be  sufficient  to  accommodate  one 
department  of  this  vast  establishment.  In  1732,  the  foundation-stone  of 
the  present  building  was  laid  on  the  site  of  the  house  and  garden  of  Sir 
John  Houblon,  the  first  governor ;  and  the  first  erection  only  comprised 
what  constitutes  the  present  centre,  with  the  courtyard,  hall,  and  bullion 
court.  In  1770,  the  eastern  wing  was  added  to  the  original;  and  in  the 
five  years  ending  1804,  the  western  wing,  with  the  Lothbury  front,  was 
added.  Since  that  period  there  have  been  frequent  additions  and  altera- 
tions made  in  the  building  to  suit  the  convenience  of  the  business 
departments,  or  to  guard  against  certain  contingencies. 

During  the  alarm  of  1 848,  caused  by  the  incoherent  threats  of  several 
violent  politicians  in  London,  a  parapet  wall  was  raised  all  round,  above  the 
cornice,  and  other  means  were  adopted  to  facilitate  defence  should  an  attack 
have  been  attempted.  The  principal  entrance  is  from  Threadneedle-street 
— the  front  having  a  centre  eighty  feet  long,  besides  wings.  The  view  of 
the  bank,  as  a  whole,  is  not  imposing;  it  is  isolated  in  its  position,  and  in 
this  respect  is  more  favored  than  many  of  the  splendid  edifices  of  Lon- 
don ;  nevertheless,  the  diversity  of  plans  upon  which  its  parts  have  been 
built,  has  denied  it  that  architectural  integrity  which  seldom  belongs  to 
any  edifice  not  the  idea  of  one  mind. 

The  front  is  composed  of  pillars,  &c.,  of  the  Ionic  order,  on  a  rustic 
base ;  and  the  wings  are  ornamented  with  a  colonnade.  The  back  of 
the  bank  is  in  Lothburj^,  from  which  a  handsome  carriage-entrance  leads 
into  the  outer,  and  then  into  the  bullion  courts. 

The  Bank  of  England,  although  ostensibly  a  public  establishment,  and 
though  it  does  present  free  access  to  several  of  its  places  of  business,  is, 
nevertheless,  carefully  guarded  against  general  intrusion ;  and  it  requires 
considerable  interest  to  obtain  a  view  of  the  more  private  apartments  of 
this  truly  wonderful  and  most  interesting  establishment.     We  were  fortu- 


330  History  of  the  Bank  of  England. 

nate  enough  to  have  a  kind  and  influential  friend,  who  procured  for  us 
an  order  of  admission  from  a  director,  and  with  this  carte,  which  opened 
the  way  to  the  treasures  of  the  greatest  commercial  country  of  the  world, 
we  presented  ourselves  at  the  bank.  We  were  politely  led  to  a  little  wait- 
ing-room by  a  man  dressed  in  black  pants  and  red  vest,  and  wearing  a 
browny  drab  coat,  with  a  silver  elliptical  medal  attached  to  his  left  breast, 
bearing  the  words  round  its  edge  of  "  Bank  of  England."  This  person 
took  our  admission  card  from  us,  and  left  us  alone  for  some  minutes.  At 
last,  another  official,  similarly  attired,  presented  himself,  and,  bowing, 
begged  to  be  permitted  to  conduct  us  over  the  premises.  Before  we  could 
be  permitted  to  advance  into  the  domains  of  England's  Plutus,  the  admission 
card  had  to  be  scrutinized,  then  initialed  on  the  back  by  a  clerk.  The 
name  of  the  registered  visitor,  and  the  number  of  the  party  accompanying 
him,  were  required  to  be  entered  in  a  journal,  with  the  name  of  the  guide 
who  was  to  lead  us  over  the  various  departments ;  the  card  was  then  coun- 
tersigned by  a  cashier,  and  we  were  at  last  admissible.  Every  department 
of  manual  labor  connected  with  the  business  of  the  bank,  save  paper- 
making,  is  carried  on  within  its  walls,  as  well  as  the  more  immediate 
business  of  amoney-lending,  money-changing  establishment;  and  the  pre- 
cision, order  and  regularity  which  pervade  the  whole  mechanical  depart- 
ments, are  wonderful  illustrations  of  method  and  mechanical  contrivance. 
The  first  room  we  entered  was  a  comparatively  small  one,  and  lighted,  like 
all  the  other  apartments,  from  above.  Before  us,  and  to  our  left,  were 
piles  of  rough-edged,  thick,  day-book  and  ledger  paper,  which  ten  persons, 
men,  women  and  boys,  were  employed  in  ruling,  cutting,  folding  and 
stitching.  The  ruling  was  rapidly  performed  by  a  woman  and  two  boys, 
the  process  being  most  ingenious  and  effective.  The  pens  or  points, 
which  conduct  the  ink  to  the  paper,  are  made  from  thin  sheets  of  brass — 
several  points,  divided  according  to  the  pattern  required,  being  in  one 
sheet.  Those  brass-pointed  ink-conductors  are  attached  to  a  wooden  cyl- 
inder, which  remains  stationary,  and  along  which,  above  the  other  pens, 
is  stretched  a  piece  of  flannel.  This  flannel  is  saturated  with  coloring 
matter,  and,  as  the  sheet  of  paper  to  be  ruled  passes  through  two  rollers, 
a  part  of  it  is  always  presented  to  the  points,  which,  attracting  the  ink 
from  the  flannel,  deposits  it  on  the  large  folios,  ruling  the  whole  sheet  at  once. 
A  beautiful  cutting  machine  takes  the  rough  edges  from  those  folios  after 
they  are  folded.  The  action  of  this  machine,  which  is  perpendicular,  is 
regulated  by  a  gauge,  which  moves  the  cutter  backwards  and  forwards 
according  to  the  will  of  the  person  superintending  the  work.  The  shavings 
from  the  paper  are  carefully  preserved,  and  sent  ofi"  to  the  paper  mill  to 
be  returned  in  folios.  The  women  who  stitch  the  reference  and  other 
books  previous  to  binding,  sit  up  in  a  high  gallery,  overlooking  the  ruling 
and  cutting  apartment. 

From  this  room  we  passed  into  the  letter-press  printing  oflSce,  where  three 
steam  cylindrical  presses  and  two  hand-presses  occupied  the  floor.  The  ma- 
chines were  splendid  ones,  from  the  manufactory  of  E.  &  E.  Cowper,  London 
and  Manchester.  Eight  persons  were  at  work  here,  setting  up  and  throwing 
oftV-in  order  to  supply  the  daily  consumption  of  sixty  folio  volumes,  &c., 
which  are  required  for  this  great  house  of  business.     In  passing  from  the 


Description  of  the  Bank.  331 

letter-press  room  we  entered  a  long  and  narrow  saloon,  in  which,  light  shafts 
and  wheels  were  revolving,  and  causing  to  move  all  the  beautiful  machinery 
in  operation  throughout  the  whole  extent  of  the  building.  In  this  saloon 
was  seated  a  person,  whose  sole  duty  it  was  to  fold  stamped  letters ;  and,  to 
judge  by  the  activity  of  his  motions,  he  had  a  good  man's  work  of  it. 
On  the  same  floor  with  this  shaft-room  is  the  mechanical  work-room,  in 
which  a  planing-machine  was  putting  a  smooth  face  upon  a  brass  plate, 
and  several  workmen  were  busy  filing  and  fitting.  Ascending  the  stairs, 
which  are  made  of  smooth  slabs  of  purple-colored  slate,  we  next  found 
ourselves  in  a  recessed  compartment,  at  the  end  of  a  gallery  which  was 
of  the  same  length  and  dimensions  as  the  shaft-room  immediately  below. 
At  a  bench  stood  a  young  man,  turning  over  the  leaves  of  a  large  refer- 
ence-book, upon  the  corners  of  which  a  precise,  methodical,  quaint-look- 
ing little  machine  made  regular  impressions,  rising  and  falling  from  point 
to  point  of  the  two  radii  of  a  right  angle,  and  numbering  a  page  of  the 
book  every  time  that  it  reached  the  inferior  culminating  point.  This  ma- 
chine regulated  itself,  and  marked  the  pages  of  great  ledgers  and  journals 
from  the  first  up  to  several  thousands,  without  making  the  least  mistake 
in  the  numeration.  Whilst  we  stood  admiring  this  happy  contrivance, 
and  wondering  at  the  intelligence  which  seemed  to  govern  the  motions 
of  this  little  complex  combination  of  brass  and  steel,  which  went  on  thus 
numbering  its  own  actions,  our  ears  were  constantly  saluted  with  the 
clash  and  clang  of  ponderous  steel  plates  and  busy,  strong-limbed  ma- 
chinery. A  few  steps  forward,  and  the  turning  of  our  eyes  towards  the 
left  brought  the  whole  busy  scene,  of  which  those  sounds  were  indica- 
tive, within  the  scope  of  our  vision.  Eight  perpendicular  shafts,  which 
communicated  their  motion  to  the  printing-presses,  were  whirling  and 
groaning,  with  the  wheels  attached  to  them,  while  sixteen  men — black, 
and  grim,  and  hot — were  actively  at  work,  printing  bank  notes.  The 
machinery  occupied  the  centre  of  the  gallery,  the  workmen's  bench  on 
one  side,  and  a  range  of  drying-presses  on  the  other.  On  the  bench, 
which  was  of  iron,  heated  in  order  to  communicate  that  necessary  quality 
to  the  plates  used  in  printing,  stood  palettes,  covered  with  Frankfort 
black,  coarse-looking  daubers,  made  of  cloth,  in  the  form  of  the  mullers 
used  by  paint-grinders,  numerous  black  rags,  and  large  masses  of  pre- 
pared chalk.  Two  men  were  employed  at  every  printing-press,  whose 
duty  it  is  to  ink,  polish,  and  place  the  paper  on  the  plate,  the  one  after 
the  other  alternately.  As  soon  as  an  impression  is  taken,  the  steel  plate 
is  quickly  removed  from  the  press.  It  is  then  inked  all  over,  the  work- 
men immediately  removing  with  chalk  and  a  rubber  all  that  is  on  the 
polished  surface.  The  ink  remaining  in  the  engraved  parts  of  the  plate, 
it  is  again  placed  in  the  press,  and  the  impression  is  communicated  to  the 
thin  gossamer  paper.  At  one  end  of  this  long  room  there  are  eight  in- 
dices corresponding  to  the  eight  presses,  which  are  numbered.  These 
register  every  stroke  of  each  press,  and  consequently  the  number  of  notes 
printed  by  every  two  men.  When  a  hundred  notes  have  been  thrown 
off  by  a  workman,  they  are  placed  in  a  box,  and  inserted  into  a  slit 
above  the  indicator  of  his  particular  press.  These  are  immediately  taken 
away,  as  if  by  magic,  and  a  hundred  blank  sheets  of  paper  appear  in  their 
stead.     It  is  impossible  to  peculate  even  a  sheet  of  this  paper  without 


332 


History  of  the  Bank  of  JEnr/land. 


immediate  detection — such  is  the  intelligent  supervision  maintained  by 
the  wonderful  steam-engine  and  the  mechanical  contrivances  pertaining 
to  it.  Twenty-eight  thousand  bank  notes  are  generally  thrown  off  here 
daily.  The  printing-  presses  arc  kept  in  motion  by  broad  woolen  belts, 
which  of  course  become  soiled,  and  are  changed  every  day.  These  are 
washed  and  dried  in  a  little  room  fitted  up  for  the  purpose,  and  so  expe- 
ditious is  the  whole  process  that  those  heavy  woolen  cloths,  several  yards 
in  length,  can  be  cleansed  and  dried  in  three  quarters  of  an  hour.  Adja- 
cent to  the  washing-room  is  the  room  in  which  the  paper  is  saturated 
with  water  before  being  sent  to  the  printers.  The  paper  is  remarkably 
thin,  and  so  porous  that  two  hundred  five  pound  note  sheets  will  absorb 
about  an  English  pint  of  water.  As  soon  as  the  water  has  been  forced  by 
a  hydraulic  machine  through  all  the  body  of  the  note-paper,  it  is  then 
taken  to  be  pressed.  This  is  an  extremely  nice  and  delicate  process,  for 
if  the  pressure  administered  was  to  exceed  the  necessary  amount,  the 
thin  sheets  of  paper  would  probably  become  coherent  into  a  solid  mass. 
The  pressure  allowed  is  three  tons,  but  the  process  is  gradual  and  fre- 
quent. The  water  pressed  from  the  paper  runs  off  by  a  pipe  into  a  res- 
ervoir, and  the  room  in  which  those  machines  work  is  perfectly  dry  and 
comfortable.  In  this  same  room  a  griuding-machine  is  constantly  pre- 
paring ink  for  the  printers.  This  ink,  or  Frankfort  black,  is  made  from 
the  calcined  lees  and  seeds  of  grapes,  and  forms  one  of  the  finest  and 
darkest  imprints  that  can  be  found.  Twenty-eight  pounds  of  this  com- 
post are  used  by  the  printers  in  the  bank  daily. 

All  the  machines  which  we  have  endeavored  to  describe  in  a  general 
manner  are  wrought  by  a  steam-engine  of  ten-horse  power,  which,  down 
m  its  snug  little  room,  keeps  up  its  constant  clatter  and  motion,  revising, 
optimising,  and  accelerating  the  labors  of  man,  without  requiring  man's 
revision.  This  engine  regulates  the  supply  of  coal  in  the  furnace,  causes 
the  fire  to  revolve,  Avhich  consumes  its  own  smoke,  and  governs  all  the 
subordinate  and  superior  motions  connected  with  itself,  except  filling  the 
hoppers  over  the  furnaces  with  coal,  as  if  it  was  possessed  of  a  rational 
intelligence.  The  fires  are  lighted,  and  the  hoppers  filled  with  coal-dust 
every  morning,  and  then  the  engine  is  left  to  do  its  own  business,  until 
its  services  are  dispensed  with  in  the  evening. 

Passing  from  the  engine-house,  we  wended  through  a  little  narrow 
passage,  and  found  ourselves  in  a  spacious  yard,  the  centre  of  which  was 
occupied  by  a  great  iron  cage,  about  twenty  feet  in  diameter,  having 
a  roof  terminating  in  a  point,  and  surrounding  and  covering  a  brick  fur- 
nace, fall  of  the  black  ashes  of  what  had  once  represented  the  wealth  of 
this  vast  industrial  community.  This  is  the  furnace  in  which  the  old 
bank  notes  are  annually  consumed.  Our  guide  informed  us  that  six  men 
are  employed  during  two  entire  days  in  destroying  the  old  notes  of  a 
year's  issue.  A  Bank  of  England  note  is  never  issued  after  it  returns  to 
the  bank.  It  is  then  cancelled  and  destroyed,  to  make  way  for  the  new 
issue. 

A  slight  description  of  the  mode  of  conducting  business  in  regard  to 
the  issue  of  bank  notes,  will  enable  our  readers  to  see  with  what  ease  the 
circulation  of  forged  notes  can  be  immediately  detected,  and  the  number 
and  amount  of  all  those  in  circulation  declared.     On  every  note  there  is 


Description  of  the  Bank.  833 

a  date  of  its  issue,  the  sum  of  its  value,  the  name  of  one  cashier,  and  the 
initial  letters  which  indicate  the  reference-book  in  which  are  all  those 
particulars,  carefully  registered.  Whenever  a  note  is  presented  to  the 
bank  the  corner  is  torn  from  it,  the  number  is  punched  out,  it  is  can- 
celled in  the  register-book,  and  then  sent  down  to  the  library,  there  to 
lie  for  ten  years,  until  burned  in  the  yard  during  the  eleventh.  By  this 
means  the  bank  can  tell,  by  reference  to  its  books,  how  many  notes  of 
any  date,  since  the  year  1694,  are  in  circulation,  and  to  what  amount. 
The  old  notes  are  kept  for  ten  years  in  the  library,  and  on  the  eleventh 
they  are  destroyed,  so  that  there  is  a  conflagration  annually.  Some  of 
the  bills  in  the  library  were  once  the  representatives  of  immense  wealth. 
One  thousand  pound  notes  are,  however,  the  largest  in  amount  that  are 
circulated  by  the  bank.  We  had  a  package  of  five  hundred  of  these  in 
our  hands.  We  had  also  five  or  six  bills,  amounting  in  the  aggregate  to 
four  millions  and  a  half  of  money,  one  of  them  alone  being  for  one  mil- 
lion sterling. 

We  now  ascended  from  the  subterranean  library  into  the  accountant's 
oflSce,  and  the  transition  was  very  striking.  The  latter  is  a  magnificent 
hall,  seated  all  through  with  desks,  at  which  about  a  hundred  clerks  were 
busy,  turning  over  the  leaves  of  books,  and  making  entries,  or  comparing 
notes  and  preparing  them  for  the  archives  below.  Sixteen  Ionic  columns 
run  in  two  parallel  rows  along  the  sides  of  this  vast  hall.  At  the  one 
end  there  is  a  great  clock,  at  the  other  is  a  recess,  in  which  are  seated 
the  senior  or  head  accountants. 

One  of  the  most  interesting  and  astonishing  departments  within  the 
whole  compass  of  the  banking  business  was  the  weighing  department,  in 
which,  with  the  rapidity  of  thought  and  a  precision  approaching  to  the 
hundredth  part  of  a  grain,  the  weight  of  the  gold  coins  is  determined. 
There  are  six  weighing  machines,  kept  working  by  the  same  agency 
which  supplies  all  the  mechanical  power  in  the  bank,  and  three  weighers 
attend  to  these.  Rolls  of  sovereigns  or  half-sovereigns  are  placed  in 
grooves,  and  are  shaken,  one  at  a  time,  by  the  motion  of  the  machine, 
into  the  weights.  If  they  are  of  standard  weight,  they  are  thrown  by 
the  same  mechanical  intelligence  into  a  box  at  the  right  hand  side  of  the 
person  who  watches  the  operation  ;  if  they  have  lost^the  hundredth  part 
of  a  grain,  they  are  cast  into  a  box  on  the  left.  Those  which  stand  the 
test  are  put  into  bags  of  one  thousand  sovereigns  each,  and  those  below 
par  are  cut  by  a  machine,  and  sent  back  to  the  mint.  Between  one  and 
two  thousand  light  sovereigns  are  thus  daily  sent  out  of  circulation.  The 
silver  is  put  up  into  bags,  each  of  one  hundred  pounds  value,  and  the 
gold  into  bags  of  a  thousand,  and  then  those  bags-full  of  bullion  are  sent 
through  a  strongly-guarded  door,  or  rather  window,  into  the  treasury. 
The  treasury  is  a  dark,  gloomy  apartment,  fitted  up  with  iron  presses, 
which  are  supplied  with  huge  locks  and  bolts,  and  which  are  perfectly 
fire-proof.  Gold,  silver  and  paper  money  ready  for  circulation,  to  the 
amount  of  twenty-two  millions  sterling,  were  in  the  treasury  when  we 
visited  it.  One  of  the  gentlemen  in  that  department  placed  one  thousand 
sovereigns  in  our  hand,  and  at  the  same  time  pointed  to  seventy  bagsful! 
of  gold  in  the  little  recess  which  he  had  thrown  open,  making  in  all  the 
modest  sum  of  seventy  thousand  pounds.  He  placed  notes  to  the 
22 


334  History  of  the  Bank  of  England. 

amount  of  half  a  million  also  upon  our  palm,  which,  no  doubt,  had  its 
own  sensations,  as  the  precious  deposit  trembled  on  its  top.  The  heads 
of  departments  meet  in  the  treasury  every  evening,  and  there  all  the 
accounts  are  balanced. 

In  the  issue-room  there  is  a  fine  marble  statue  of  "William  III.,  which 
seems  to  preside  over  twenty-eight  money-changers,  who  are  constantly 
employed  taking  or  giving  gold  and  silver  for  Bank  of  England  notes,  or 
vice  versa.  The  desks  of  the  clerks  surround  this  spacious  apartment, 
and  offer  every  facility  for  the  active  business  carried  on  here.  In  the 
cashier's  room  we  counted  eleven  white-haired  gentlemen  busily  signing 
and  countersigning  the  notes  to  be  issued.  The  banking  department  is 
now  carried  on  in  a  temporary  wooden  erection,  in  consequence  of  some 
necessary  alterations  being  made  in  the  usual  place  of  business.  Two 
beautiful  elms  are  growing  up  through  the  roof  and  centre  of  this  bank- 
ing-house, the  leaves  on  those  branches  enclosed  being  sear  and  withered, 
while  those  that  have  been  allowed  to  breathe  even  the  deleterious  air  of 
London  are  bright  and  green.  Eighty  clerks  were  huddled  in  here,  and 
yet  the  duties  of  their  office  seemed  to  be  discharged  with  remarkable 
ability  and  ease.  All  the  desks  were  distinguished  by  particular  letters 
of  the  alphabet,  which  referred  the  person  doing  business  with  one  clerk 
to  the  individual  necessary  to  complete  it,  without  noise  or  confusion. 

The  most  splendid  of  all  the  halls  in  the  Bank  of  England,  however,  is 
the  Rotunda,  in  which  all  the  stock-jobbers,  stock-brokers  and  others 
meet  for  the  purpose  of  transacting  business  in  the  public  funds,  and  in 
which  the  government  dividends  are  paid.  From  the  floor  to  the  apex 
of  the  dome  is  eighty-two  feet,  and  the  stucco-work  is  very  beautiful. 
Fourteen  upright  cariatides  (female  figures)  stand  upon  a  circular  pedi- 
ment and  support  the  lofty  dome,  through  which  falls  the  softened,  chas- 
tened sunbeams.  The  cupola  which  caps  the  summit  of  the  dividend 
warrant  office  is  very  rich  in  alto-relievos,  and  is  also  supported  by  twenty 
statues,  standing  two  and  two  by  each  other's  sides.  The  transfer  office 
is  that  in  which  all  transactions  in  the  stocks  are  settled,  after  parties 
have  agreed  to  a  transmission.  He  who  sells  out  cancels  his  claims  upon 
the  government,  transferring  them  to  the  person  who  may  have  purchased 
from  him.  The  consolidated  annuity  office  is  appropriated  to  the  sale  of 
annuities,  and  to  the  granting  of  the  receipts  required  by  the  annuitants 
before  they  draw  their  money.  All  the  transactions  of  this  office  are 
preserved  in  the  presses,  the  doors  of  which  are  numbered  and  lettered, 
and  indicate  the  particular  entry-books  Avithin  that  have  been  used  since 
the  incorporation  of  the  bank  by  royal  charter  in  1694. 

Nine  families  constantly  reside  within  the  precincts  of  the  bank — the 
houses  of  the  secretary,  chief  accountant  and  gate-keeper  being  situated 
round  the  court,  into  which  the  Lothbury  gate  opens.  Around  the  whole 
extent  of  the  bank,  within  the  parapet  wall,  there  is  a  walk  upon  which 
the  sentinels  pace  during  the  night,  lest  thieves  should  attempt  to  enter. 
Thirty-four  private  soldiers  and  an  officer  are  deputed  to  this  duty  every 
night,  each  man  receiving  a  shilling,  and  the  officer  half-a-crown  and  his 
supper.  Besides  these  soldiers,  and  the  families  resident  in  the  bank, 
there  are  fourteen  men  constantly  there,  day  and  night,  who  are  perfectly 
acquainted  with  all  the  labyrinthian  mazes  of  the  vast  building,  and  who 


Description  of  the  Bank.  335 

could  immediately  bring  the  fire-engines  into  operation,  which  stand  in 
the  furnace-court.  There  are  about  one  thousand  individuals  employed 
in  this  establishment.  In  1819  there  were  eleven  hundred  clerks  em- 
ployed, and  twenty-five  years  previous  to  that  period  two  hundred  and 
fifty  sufliced  to  discharge  the  duties  required. 

The  business  hours  are  from  nine  to  five  o'clock,  and  the  most  rigid 
exactitude  in  time-keeping  is  demanded  from  all  the  employees.  If  an 
individual  is  three  times  late  in  his  attendance,  he  is  called  before  the  di- 
rectors and  reprimanded ;  if  the  fault  is  again  repeated,  the  delinquent 
receives  a  gentle  intimation  to  resign  his  situation.  Fifty  or  more  of 
those  employed  in  this  vast  national  counting-house  are  constantly  en- 
joying a  holiday,  the  period  of  relaxation  extending  as  the  period  during 
which  a  man  has  served  extends.  The  direction  of  the  bank  is  vested  in 
a  governor,  deputy -governor  and  twenty-four  directors,  who  are  elected 
annually  at  a  general  court  of  the  proprietors.  Thirteen  directors,  with 
the  governor,  form  a  court  for  the  management  of  business. 

According  to  a  pamphlet  issued  by  Mr.  Thomson  Hankev,  formerly  gov- 
ernor of  the  bank,  the  revenue  is  paid  into  the  Bank  of  England  at  the  rate 
of  about  £1,000,000  a  week,  that  is,  in  ordinary  times ;  a  considerable  por- 
tion of  this  is  allowed  to  accumulate  to  provide  means  on  each  quarter-day 
for  the  payment  of  the  dividends  on  the  government  debt.  Suddenly  on 
those  days  five  or  six  millions  sterling  is  paid  away  by  the  bank  to  the 
public  ;  but  the  difference  as  to  the  abundance  or  scarcity  of  money  just 
before  or  just  after  the  payment  of  this  large  sum  is  scarcely  appreciable, 
so  nicely  do  the  ordinary  operations  of  banking  accommodate  and  ren- 
der easy  all  these  large  transfers  of  money.  And  for  all  this  business  the 
bank  receives  no  other  remuneration  but  the  use  of  the  government  bal- 
ances, which  vary  from  "n?7,"  the  day  after  the  payment  of  the  dividend, 
until  they  accumulate  to  the  amount  required  for  payment  of  dividends; 
and  if  then  there  is  not  suflScient,  the  bank  are  expected  to  advance  the 
difference,  which  is  repaid  out  of  the  next  accruing  revenue. 

And  these  remarks  apply  not  only  to  the  public  banking  department 
the  benefit  and  convenience  are  equally  apparent  if  we  look  to  the  depart- 
ment for  private  banking.  In  this  department  every  kind  of  banking 
business  is  carried  on  for  ordinary  private  customers ;  his  savings  may  be 
invested  by  the  bank,  and  the  dividend  and  interest  of  all  kinds  received 
for  him  and  placed  to  his  account ;  all  the  property  he  may  keep  in  se- 
curities will  be  taken  charge  of  for  him,  and  he  may  keep  all  his  cash 
and  other  securities  in  the  same  way  as  he  would  keep  them  at  any  other 
private  banking  establishment,  and  with  all  similar  conveniences  as  to 
receipts  or  payments  in  any  way  that  may  be  required.  If  a  large  de- 
posit is  required  to  be  made  on  account  of  a  railway,  if  large  foreign  pay- 
ments are  required  to  be  made  abroad  by  the  transmission  of  gold,  every 
facility  is  given  through  the  machinery  of  the  existing  system,  by  which 
these  large  transactions  are  daily  carried  out,  without  causing  the  smallest 
derangement  to  the  ordinary  trade  of  the  country  ;  or,  at  least,  if  any  de- 
rangement or  inconvenience  is  experienced,  it  is  doubtless  in  a  very  miti- 
gated form,  in  consequence  of  the  general  prevalence  of  a  good  system  of 
banking  throughout  the  country. 


336 


Jlisiony  of  the  Bank  of  England. 


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Bank  Statistics,  1844—1861. 


337 


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338 


History  of  the  BanJc  of  England. 


s  e  =0  «    . 


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Bank  Statistics^  1844 — 1861. 


339 


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340 


History  of  the  Bank  of  England. 


DIRECTORS    OF    THE    BANK    OF    ENGLAND, 
From  1694  to  1861. 


Sir  John  Houblon, 
Michael  Godfrey, 
Sir  Thomas  Abney, 
Sir  James  Batemen, 
Brooke  Bridges,    . 
George  Boddington, 
James  Denew, 
Sir  Henry  Furnese, 
Sir  William  Gore, 
Thomas  Goddard, 
Sir  Gilbert  Heathcote, 
Sir  William  Hedges 
Sir  James  Houblon, 
Sir  John  Huband, 
Abraham  Houblon, 
Sir  Theodore  Janssen, 
John  Knight, 
Samuel  Lethieullier,  . 
John  Lordell, 
William  Paterson, 
Robert  Raworth,  . 
Sir  William  Scawen, 
Obadiah  Sedgwick, 
John  Smith, 
Nathaniel  Tench,  . 
Sir  John  Ward,         , 
Henry  Cornish,    . 
Edward  Clarke, 
Sir  John  Cope,  Sen., 
Peter  Godfrey,      .     . 
Anthony  Stevens, 
Sir  William  Ashhurst, 
Robert  Bristow, 
Samuel  Bultcll, 
John  Page,    . 
Sir  Francis  Eyles, 
John  Shipman, 
Sir  Nathaniel  Gould, 


1694 


1695 


1697 


Samuel  Lock,        .         .        .        . 

1691 

Sir  Peter  Delme, 

.  1698 

William  Dawsonne, 

" 

Francis  Stratford,     . 

.     " 

Peter  Gott,    .... 

« 

Sir  Richard  Levett, . 

« 

John  Devinck,       ,         .        .        . 

.    1699 

John  Rudge,     .... 

<( 

Richard  Perry,      .         .         . 

it 

John  Reynardson,     . 

.  1700 

William  Desbouverie,   . 

<c 

Josiah  Diston,  .... 

.  lYOl 

John  Gould,  .... 

ct 

John  Hanger,   .... 

•  < 

Humphrey  South, 

" 

Sir  Robert  Clayton, 

.  1702 

Sir  Gerard  Conyers, 

« 

Abraham  Hill, 

,     " 

Samuel  Heathcote, 

<< 

Charles  Chambrelan, 

.  1703 

Sir  William  Hodges,     . 

a 

Sir  Charles  Peers,    , 

.1705 

Sir  Thomas  Scawen,     . 

« 

Sir  John  Cope,  Jr.,   . 

.  1706 

James  Dolliffe, 

.      1708 

John  Emilie.     .... 

« 

William  Gore, 

.      1709 

Sir  Justus  Beck, 

.1710 

William  Henry  Commellissen, 

(( 

John  Dolben,    .... 

<t 

Jeremiah  Powell,  . 

<( 

Sir  Denis  Dutry, 

.  1711 

Heneage  Featherstone, . 

« 

Sir  Philip  Jackson,    , 

« 

John  Ward,  Jr.,     . 

" 

Sir  George  Thorold, 

,    " 

Mr.  Robert  Atwood, 

1712 

Richard  Gary, 

.     " 

Directors,  1694—1861. 


Sir  Joseph  Hodges, 
Sir  Randolph  Knipe, 
Christopher  Lethieullier 
Mattliew  Ilaper, 
John  Edmonds,     . 
Sir  Richard  Houblon, 
Richard  Chiswell, 
Sir  William  Joliflf,      , 
Henry  Lyell, 
William  Thompson,    . 
Sir  John  Eyles,     . 
Barrington  Eaton, 
John  Francis  Fauquier, 
Humphrey  Morice,     . 
Moses  Raper, 
Sir  Joseph  Eyles, 
Sir  William  Humfreys, 
Richard  Du  Cane, 
Samuel  Holden,     . 
Bryan  Benson,  , 
Thomas  Cooke, 
Delillers  Carbonnel,  . 
Nathaniel  Gould,  . 
Henry  Herring, 
Hon.  Horatio  Townshend 
Sir  Edward  Bellamy, 
Matthew  Howard, 
John  Olmius, 
Sir  Francis  Forbes, 
William  Fawkener, 
Sir  John  Heathcote, 
John  Nicoll, 
Sir  Francis  Porten, 
Stamp  Brooksbank, 
James  Gaultier, 
William  Hunt,  . 
William  SnoUing,  . 
Clement  Bochm, 
Joseph  Paice,  Jr., 
Matthew  Raper, 
James  Spilman, 
Robert  Alsop, 
John  Bance,  . 
Henry  Neale,     . 
Robert  Thornton, . 
Charles  Savage, 
Benjamin  Lethieullier, 
Benjamin  Longuet,     . 
Sir  John  Thompson, 


1712 

Christopher  Tower, 

" 

John  Eaton  Dodsworth,     , 

" 

Frederick  Frankland,    . 

" 

Samuel  Trench, 

1713 

Alexander  Sheafe, 

" 

Richard  Chiswell,  Jr., 

1714 

Sir  John  Lequesne, 

" 

Benjamin  Mee,  . 

" 

Mark  Weyland, 

" 

Claude  Fonnereau,   . 

1715 

Charles  Palmer,     . 

1716 

John  South, 

" 

Matthew  Beachcroft,     . 

" 

Robert  Nettleton,      . 

" 

Thomas  Whateley, 

1717 

Merrik  Burrell, 

1719 

James  Lever, 

1720 

Theophilus  Salwey,  . 

" 

Robert  Marsh, 

1721 

James  Theobald, 

" 

Robert  Salusburj-, 

1722 

Peter  Thomas,  . 

" 

Bartholomew  Burton,    . 

« 

Godfrey  Thornton,    . 

" 

John  Weyland,.     . 

1723 

Thomas  Winterbottom,     . 

" 

Charles  Boehm,     . 

" 

Matthew  Clairmont, 

1724 

Samuel  Handley, . 

" 

Richard  Stratton, 

1725 

Harry  Thompson, 

1726 

Sir  Samuel  Fludyer, 

" 

John  Sargent, 

1728 

William  Cooper, 

" 

Philip  de  la  Haize, 

" 

Sir  Thomas  Chitty,  . 

" 

Peter  Du  Cane, 

1729 

Edward  Payne, 

1730 

Thomas  Plurner,  ' . 

" 

Peter  Theobald, 

" 

Robert  Dingley,    . 

1731 

James  Sperling, 

" 

Henry  Plant, 

1732 

Samuel  Beachcroft,  . 

" 

Gustavus  Brander, 

1733 

Daniel  Booth,    . 

1734 

John  Cornwall, 

" 

Peter  Gaussen, . 

" 

James  Haughton  Langston 

341 

1734 

1736 

1737 
1738 

C( 
<<. 

1739 
1741 

1742 

1743 
1744 

1746 

1748 
(( 

1749 

175^ 

cc 
ti 
c< 

u 

1753 
1754 
1755 
1756 

1757 

1759 
1760 
1761 


342 

Edmund  "Wilcox,  . 
William  Bowden, 
William  Ewer, 
Richard  Neave, 
John  Fisher. 
Christopher  Hake,  Jr., 
Thomas  Thomas,  . 
Edward  Darell, 
William  Halhead, . 
Lyde  Browne,  . 
George  Drake, 
George  Hayter, 
Benjamin  Hopkins, 
George  Peters,   . 
Mark  Weyland,     . 
Roger  Boehm,   , 
Matthew  Howard, 
Benjamin  Branfill, 
William  Snell,       . 
Samuel  Bosanquet,    . 
Martyn  Fonnereau, 
Godfrey  Thornton,     . 
Daniel  Giles,  Jr.,  . 
Christopher  Puller,    . 
Thomas  Dea, 
Richard  Clay,    . 
Thomas  Raikes,     . 
Benjamin  Mee,  Jr.,    . 
John  Sargent,  Jr., 
William  Cooke,  . 

Samuel  Thornton, 
Thomas  Scott  Jackson, 
Job  Matthew, 
Joseph  Nutt, 
Thomas  Boddington, 
Benjamin  Winthrop,  . 
Beeston  Long,  Jr., 
James  Maude,    . 
Isaac  Osborne, 
Sir  Brook  Watson,    . 
John  Harrison, 
Bicknell  Coney, 
John  Whitmore,  Jr., 
Peter  Isaac  Thellusson 
Moses  Yeldham,   . 
William  Manning,  Jr., 
John  Pearce, 
John  Puget, 
Thomas  Lewin,     . 


History  of  the  Bank  of  England, 


.  1V61 

Peter  Cazalet, 

1792 

1763 

William  Mellish, 
Edward  Simeon,    . 

(< 

" 

Alexander  Champion,  Jr., 

.  1794 

,  1764 

George  Dorrien,    . 

" 

" 

Jeremiah  Harman,     . 

i< 

.  1765 

Nathaniel  Bogle  French, 

.      1796 

1767 

Charles  Pole 

.     " 

<( 

Thomas  Amyand, 

.      1798 

1768 

Thomas  Langley, 

.     " 

,     " 

Ebenezer  Maitland, 

" 

i< 

Peter  Free,       .... 

.  1800 

.     " 

Jeremiah  Olive,     . 

ti 

(( 

Henry  Smith,  .... 

.  1802 

« 

Stephen  Thornton, 

(( 

1769 
« 

John  Bowden,  .... 
Cornelius  BuUer,   . 

.  1803 

1770 

Alexander  Baring,    . 
John  Josiah  Holford, 

.  1805 

1771 

John  Baker  Richards, 

.     " 

(< 

Samuel  Drew, 

.      1806 

1772 

Henry  Davidson, 

.  1807 

.  1774 

John  Stainforth,    . 
Sir  Robert  Wigram, 

.  1775 

John  Campbell,     . 

.      1808 

1776 

William  Haldimand, 
George  Blackman, 

.  1809 
.      1810 

1777 

William  Tierney  Robarts, 

.     " 

.  1778 

John  Horsley  Palmer,  . 

.      1811 

1780 

Andrew  Henry  Thompson, 

(( 

.    " 

Sir  Thomas  Weave, 

.      1812 

<t 

Richard  Mee  Raikes, 

It 

.  1781 

James  Pattison,  Jr., 

.      1813 

" 

William  Ward, 

.  1817 

.     " 

Samuel  Hibbert,  . 

.      1819 

" 

Timothy  Abraham  Curtis, 

.  1820 

.  1784 

John  Rae  Reid, 

" 

(( 

Sir  John  Henry  Pelly, 

.  1821 

(( 

David  Barclay,      .         , 

(( 

K 

John  Cockerel], 

<< 

.  1785 

Henry  Porcher,     . 

(( 

1786 

William  Cotton, 

.  1822 

.     " 

John  Benjamin  Heath,  . 

.      1823 

1787 

William  R.  Robinson, 

.  1825 

.  1788 

James  Morris, 

.       1827 

1790 

William  Thompson,  . 

.     " 

<( 

Humphrey  St.  John  Mildmay, 

,      1828 

" 

John  Oliver  Hanson, 

.  1829 

.  1791 

Charles  Pascoe  Grenfell, 

.      1830 

Directors,  1694—1861. 


343 


Abel  Lewes  Gower,  ,        .        .      1830 

Sheffield  Neave,    . 

Rowland  Mitchell,     .        .        .      1833 

Christopher  Pearse,       .        .        .1834 

Henry  Davidson,       .        .        .      1835 

Bonamy  Dobree,  . 

Thomson  Hankey,  Jr., 

Henry  James  Prescott, 

Robert  Barclay,         .         .        .      1837 

John  Malcolmson, 

John  Gellibrand  Hubbard,         .      1838 

Charles  Frederick  Huth, 

Alfred  Latham, 

Thomas  Charles  Smith, 

Thomas  Matthias  Weguelin,       .         " 

Edward  Henry  Chapman,      .        .  1840 

Kirkman  Daniel  Hodgson,         .         " 

William  Little,      .         .         .        .1842 

David  Powell,    .        .         .        .         " 

Francis  Wilson, 

Arthur  Edward  Campbell,         .      1843 


Thomas  Tooke,  Jr.,   . 
Henry  Lancelot  Holland, 
Thomas  Newman  Hunt, 
George  Warde  Norman, 
James  Malcolmson,  . 
Thomas  Baring,    . 
Henry  WoUaston  Blake, 
George  Lyall,  Jr., 
Thomas  Masterman, . 
Alexander  Matheson,     . 
Henry  Hulse  Berens, 
Robert  Wigram  Crawford, 
Benjamin  Buck  Greene, 
Henry  Hack  Gibbs, 
James  Pattison  Currie, 
Travers  Buxton,   . 
George  Joachim  Goschen, 
James  Alexander  Guthrie, 
Edward  Horsley  Palmer, 
John  William  Birch, 
Stephen  Cave,  M.  P., 


1843 
1844 


1846 
1848 


1849 

1850 
<( 

1853 
1855 
185*7 
1858 


1860 


Governor,  Deputt-Governor  and  Directors  of  the  Bank  of 

England, 

Elected  April,  1861, 


With  the  dates  when  they  were  respectively  elected. 


Thomas  Baring, 
Henry  Hulse  Berens,    . 
Henry  Wollaston  Blake,    . 
John  William  Birch,     . 
Travers  Buxton, 
Arthur  Edward  Campbell, 
Stephen  Cave,  . 
f  WilUam  Cotton,  . 
fBonamy  Dobree, 
Benjamin  Buck  Greene, 
George  Joachim  Goschen, 
James  Alexander  Guthrie, 


First  Elected. 

First  Elected. 

.      1848 

f  Thomson  Hankey, 

.      1835 

.  1849 

fJohn  Benjamin  Heath,    . 

.  1823 

.      1848 

■)■  John  Gellibrand  Hubbard, 

.      1838 

,  1860 

George  Lyall,  . 

.  1848 

.      \%h1 

Thomas  Masterman, 

« 

.  1843 

Alexander  Matheson, 

.     " 

.      1860 

*James  Morris,     . 

.      1827 

.  1822 

f  Sheffield  Neave, 

.  1830 

.      1835 

George  Warde  Norman, 

•      1844 

.  1850 

Edward  Horsley  Palmer, 

.  1858 

.      1858 

Thomas  Charles  Smith, 

.      1838 

1858 


*  Formerly  Governor  of  the  Bank. 

f  Formerly  Deputy-Governor,  and  afterwards  Governor  of  the  Bank. 


344  Hiitory  of  the  Bank  of  England. 


Duties,  Qualifications,  &c.,  of  the  Governor  and  Deputy-Governor. 

Bv  the  act  of  1844,  the  banking  department  of  the  Bank  of  England 
was  separated  from  its  issuing  department,  and  was  to  be  managed  like 
"  any  other  banking  concern  issuing  Bank  of  England  notes."  Taking 
this  view  of  the  banking  department,  we  propose  to  inquire  on  what 
principles  it  ought  to  be  administered.  We  shall  do  this,  however,  not 
so  much  with  the  view  of  bringing  forward  any  notions  of  our  own,  as  to 
lay  before  the  reader  some  account  of  those  principles  which  the  bank 
directors  have  adopted  for  their  government. 

The  Bank  of  England  is  governed  by  a  court  of  directors,  according 
to  Gilbart's  "  Treatise  on  Banking,^''  consisting  of  twenty-four  members. 
These  are  selected  from  the  mercantile  classes  of  London,  virtually,  by  the 
other  directors,  who  form  what  is  called  a  House  List.  They  recommend 
certain  persons  to  be  chosen  as  directors,  and  the  proprietors  always  fol- 
low this  recommendation.  The  court  hold  their  meetings  every  Thurs- 
day, and  they  then  receive  a  report  of  the  transactions  of  the  preceding 
week. 

The  executive  administration,  in  the  mean  time,  is  in  the  hands  of  the 
governor  and  deputy-governor,  who  may  be  advised  or  assisted  by  the 
committee  of  treasury.  This  committee  is  composed  of  those  directors 
who  have  held  the  office  of  governor,  of  the  existing  governor  and  deputy- 
governor,  and  of  the  director  who  is  intended  to  be  the  next  deputy-gov- 
ernor. A  director  is  at  first  an  ordinary  director,  and  attends  the  weekly 
meetings  of  the  court.  In  turn  he  becomes,  for  one  year,  a  member  of 
the  committee  of  treasury ;  then  deputy-governor  for  two  years  ;  then 
governor  for  two  years;  and  afterwards  a  permanent  member  of  the 
committee  of  treasury.  This  committee  meet  once  a  week,  and  at  such 
other  times  as  they  may  be  called  together  specially  by  the  governor. 
Sometimes  they  discuss  the  measures  that  are  to  be  submitted  to  the  next 
meeting  of  the  court ;  but  the  court  do  not  now  so  readily  as  formerly 
adopt  their  recommendations.  The  governor  and  deputy-governor,  for 
the  time  being,  make  all  loans  and  advances,  and  sometimes  raise  the 
rate  of  discount,  without  waiting  for  the  opinion  of  the  court.  They 
conduct  all  negotiations  Avith  the  government,  and,  subject  to  the  sanc- 
tion of  the  court,  have  the  whole  administration  of  the  affairs  of  the  bank. 
Each  director  must  hold  £2,000  of  bank  stock;  the  deputy-governor, 
£3,000  ;  and  the  governor,  £4,000.  It  was  the  rule  that  every  director 
should  take  his  turn  for  becoming  governor,  but  recently  it  has  been 
determined  to  place  in  that  office  the  director  whom  the  other  directors 
shall,  by  ballot,  think  best  qualified.  Several  suggestions  were  made  be- 
fore the  parliamentary  committees,  for  improving  the  composition  of  the 
court  of  directors.  It  was  proposed  that  all  the  directors  should  not  be 
taken  from  the  commercial  classes,  but  that  some  should  be  selected  from 
the  banking  and  manufacturing  interests.  It  was  also  asked,  whether  a 
permanent  governor,  either  for  life  or  for  a  number  of  years,  would  not 
be  preferable  to  the  present  system. 


The  English  National  Debt.  345 


OFTHE  NATIONAL  DEBT  OF  GREAT  BRITAIN. 
By  T.  Babington  Macaulay. 

It  was  about  the  year  1688  that  the  word  stock-jobber  was  first  heard 
in  London.  In  the  short  space  of  four  years  a  crowd  of  companies, 
every  one  of  which  confidently  held  out  to  subscribers  the  hope  of  im- 
mense gains,  sprang  into  existence  ;  the  Insurance  Company,  the  Paper 
Company,  the  Lute-string  Company,  the  Pearl  Fishery  Company,  the 
Glass-Bottle  Company,  the  Alum  Company,  the  Blythc  Coal  Company, 
the  Sword-blade  Company.  There  was  a  Tapestry  Company,  which 
would  soon  furnish  pretty  hangings  for  all  the  parlors  of  the  middle 
class,  and  for  all  the  bed-chambers  of  the  higher.  There  was  a 
Copper  Company,  which  proposed  to  explore  the  mines  of  England,  and 
held  out  a  hope  that  they  would  prove  not  less  valuable  than  those 
of  Potosi.  There  was  a  Diving  Company,  which  undertook  to  bring 
up  precious  effects  from  shipwrecked  vessels,  and  which  announced 
that  it  had  laid  in  a  stock  of  wonderful  machines  resembling  complete 
suits  of  armor.  In  front  of  the  helmet  was  a  huge  glass  eye,  like  that 
of  a  cyclop  ;  and  out  of  the  crest  went  a  pipe,  through  which  the  air  was 
to  be  admitted. 

The  whole  process  was  exhibited  on  the  Thames.  Fine  gentlemen 
and  fine  ladies  were  invited  to  the  show,  were  hospitably  regaled,  and 
were  delighted  by  seeing  the  divers  in  their  panoply  descend  into  the 
river  and  return  laden  with  old  iron  and  ships'  tackle.  There  was  a 
Greenland  Fishing  Company,  which  could  not  fail  to  drive  the  Dutch 
whalers  and  herring  busses  out  of  the  Northern  Ocean.  There  was  a 
Tanning  Company,  which  promised  to  furnish  leather  superior  to  the 
best  that  was  brought  from  Turkey  or  Russia.  There  was  a  society 
which  undertook  the  office  of  giving  gentlemen  a  liberal  education  on 
low  terms,  and  which  assumed  the  sounding  name  of  the  Royal  Acade- 
mies Company.  In  a  pompous  advertisement  it  was  announced  that  the 
directors  of  the  Royal  Academies  Company  had  engaged  the  best  masters 
in  every  branch  of  knowledge,  and  were  about  to  issue  twenty  thousand 
tickets  at  twenty  shillings  each. 

There  was  to  be  a  lottery ;  two  thousand  prizes  were  to  be  drawn ; 
and  the  fortunate  holders  of  the  prize  were  to  be  taught,  at  the  charge  of 
the  company,  Latin,  Greek,  Hebrew,  French,  Spanish,  conic  sections, 
trigonometry,  heraldry,  japanning,  fortification,  book-keeping,  and  the 
art  of  playing  on  the  theorobo.  Some  of  these  companies  took  large 
mansions,  and  printed  their  advertisements  in  gilded  letters.  Others, 
less  ostentatious,  were  content  with  ink,  and  met  at  coftee-houses  in  the 
neighborhood  of  the  Royal  Exchange.  Jonathan's  and  Garraway's 
were  in  a  constant  ferment  with  brokers,  buyers,  sellers,  meetings  of  di- 
rectors, meetings  of  proprietors.     Time-bargains  soon  came  into  fashion. 


346  History  of  the  Bank  of  England. 

Extensive  combinations  were  formed,  and  monstrous  fables  were  cir- 
culated, for  the  purpose  of  raising  or  depressing  the  price  of  shares. 

Our  country  witnessed  for  the  first  time  those  phenomena  with  which  a 
long  experience  has  made  us  familiar.  A  mania,  of  which  the  symptoms 
were  essentially  the  same  with  those  of  the  mania  of  1V20,  of  the  mania 
of  1825,  of  the  mania  of  1845,  seized  the  public  mind.  An  impatience 
to  be  rich,  a  contempt  for  those  slow  but  sure  gains  which  are  the 
proper  reward  of  industry,  patience  and  thrift,  spread  through  society. 
The  spirit  of  the  cogging  dicers  of  Whitefriars  took  possession  of 
the  grave  senators  of  the  city,  wardens  of  trades,  deputies,  aldermen.  It 
was  much  easier  and  much  more  lucrative  to  put  forth  a  lying  pros- 
pectus announcing  a  new  stock,  to  persuade  ignorant  people  that  the 
dividends  could  not  fall  short  of  twenty  per  cent,  and  to  part  with  five 
thousand  pounds  of  this  imaginary  wealth  for  ten  thousand  solid  guineas, 
than  to  load  a  ship  with  a  well-chosen  cargo  for  Virginia  or  the  Levant. 
Every  day  some  new  bubble  was  puffed  into  existence,  rose  buoyant, 
shone  bright,  burst,  and  was  forgotten. 

The  new  form  which  covetousness  had  taken,  furnished  the  comic 
poets  and  satirists  with  an  excellent  subject;  nor  was  that  subject  less 
welcome  to  them  because  some  of  the  most  unscrupulous  and  most  suc- 
cessful of  the  new  race  of  gamesters  were  men  in  sad-colored  clothes  and 
lank  hair,  men  who  called  cards  the  Devil's  books,  men  who  thought  it 
a  sin  and  a  scandal  to  win  or  to  lose  twopence  over  a  backgammon- 
board.  It  was  in  the  last  drama  of  Shadwell  that  the  hypocrisy  and 
knavery  of  these  speculators  was,  for  the  first  time,  exposed  to  public 
ridicule.  He  died  in  November,  1692,  just  before  the  stock-jobbers 
came  on  the  stage ;  and  the  epilogue  was  spoken  by  an  actor  dressed  in 
deep  mourning.  The  best  scene  is  that  in  which  four  or  five  stern  non- 
conformists, clad  in  the  full  Puritan  costume,  after  discussing  the  pros- 
pects of  the  Mousetrap  Company  and  the  Fleakilling  Company,  examine 
the  question  whether  the  godly  may  lawfully  hold  stock  in  a  company 
for  bringing  over  Chinese  rope-dancers.  "  Considerable  men  have 
shares,"  says  one  austere  person  in  cropped  hair  and  bands  ;  "  but  verily 
I  question  whether  it  be  lawful  or  not." 

These  doubts  are  removed  by  a  stout  old  Roundhead  colonel,  who 
had  fought  at  Marston  Moor, 'and  who  reminds  his  weaker  brother  that 
the  saints  need  not  themselves  see  the  rope-dancing,  and  that,  in  all 
probability,  there  will  be  no  rope-dancing  to  see.  "  The  thing,"  he  says, 
"is  likely  to  take  ;  the  shares  will  sell  well;  and  then  we  shall  not  care 
whether  the  dancers  come  over  or  no."  It  is  important  to  observe  that 
this  scene  was  exhibited  and  applauded  before  one  farthing  of  the 
national  debt  had  been  contracted.  So  ill-informed  were  the  numerous 
writers  who,  at  a  later  period,  ascribed  to  the  national  debt  the  existence 
of  stock-jobbing,  and  of  all  the  immoralities  connected  with  stock-job- 
bing. The  truth  is,  that  society  had,  in  the  natural  course  of  its  growth, 
reached  a  point  at  which  it  was  inevitable  that  there  should  be  stock-job- 
bing, whether  there  were  a  national  debt  or  not,  and  inevitable,  also, 
that,  if  there  were  a  long  and  costly  war,  there  should  be  a  national 
debt. 


Suspension  and  Starvation.  347 


THE    HISTORY 

OF 

THE  BANK  OF  ENGLAND, 

From  the  new  Charter  (1844)  to  the  tear  1861. 


CHAPTER  I. 

GENERAL   REMARKS SIR    ROBERT    PEEL — DEPRESSION   OF   ENGLISH   TRADE,    1841-1843 — 

THE    IMPORTANCE   OF   THE    UNITED    STATES   AS   A    MARKET  ADMITTED  BY  ENGLISH  STATES- 
MEN  SIR    ROBERT   PEEL's    SPEECH LORD  JOHN  RUSSELL  IN  OPPOSITION SIR  ARCHIB.VLD 

Alison's  views — lord  palmerston. 

The  sixteen  years  which  followed  the  last  charter  of  the  bank  have 
been  pregnant  Avith  important  events  of  a  financial  character;  the  most 
important,  perhaps,  during  the  whole  history  of  the  institution.  The 
bank  has  twice,  during  this  short  period,  been  on  the  brink  of  suspension, 
and  was  relieved  only  by  the  interference  of  government.  The  second 
instance  occurred  after  new  gold,  to  the  extent  of  one  hundred  millions 
sterling,  or  more,  had  been  poured  into  Western  Europe  from  California 
and  Australia.  The  Bank  of  France  had,  during  the  same  period,  sus- 
pended specie  payment.  Two  financial  revulsions  have  occurred  in  the 
United  States,  when,  with  few  exceptions,  the  banks  of  the  whole  country 
suspended  specie  payments.  The  production  of  gold  and  silver  through- 
out the  world,  which,  up  to  1844,  was  annually  about  six  or  eight  millions 
sterling,  has  recently  advanced  from  twenty-five  to  thirty  millions  sterling 
per  annum,  thus  stimulating  industry  and  production  largely  throughout 
Europe  and  America.  Sir  Robert  Peel,  the  author  of  the  new  charter 
of  the  bank,  has  left  the  world's  stage,  after  witnessing  the  failure  of  the 
charter  to  fully  accomplish  the  end  promised;  Europe  and  America,  Asia 
and  Europe,  have  been  knit  together  by  a  wire  cord,  and  capital  is  now 
subscribed  to 

"  Put  a  girdle  round  about  the  earth," 

whereby  London  may  speak  to  San  Francisco  (the  prospective  commercial 
centre  of  the  world)  in  less  than  "/or/y  minutes.''''  During  the  same 
short  space  of  sixteen  years  the  suspended  States  of  this  Union  (five  at 


348  History  of  the  Bank  of  England. 

least)  have  resumed  payment  of  their  obligations ;  two  violent  wars,  with 
sundry  revolutions,  have  occurred  in  Europe ;  the  ancient  city  of  the 
Cortez  has  been  conquered  by  the  "  hordes  of  the  North,"  and  magnani- 
mously given  up  by  the  captors  to  the  possession  of  their  weaker  enemy, 
and  millions  were  paid  to  the  latter  for  portions  of  their  territory ;  the 
northwest  passage  of  the  American  continent  has  been  discovered ;  steam 
has  accomplished  wonders  between  Europe  and  America,  and  between 
Europe  and  their  distant  colonies  of  Asia,  Africa  and  Australia;  Ireland 
has  been  on  the  verge  of  starvation,*  when  600,000  of  her  people  died 
from  hunger  alone,  and  its  effects,  and  her  population  was  reduced  two 
millions  by  emigration  and  privation ;  England's  minister  has  been  ex- 
pelled from  the  capital  of  the  United  States ;  speculation  has  been  rife  in 
Europe  and  America,  and  its  inevitable  effects,  revulsion  and  bankruptcy, 
have  followed  in  its  train;  the  railway  and  the  telegraph  have  brought 
remote  regions  together ;  China,  with  her  four  hundred  millions  of  peo- 
ple, has  been  conquered  by  the  united  forces  of  the  English  and  the 
French. 

The  Bank  of  England,  instead  of  pursuing  one  even  course,  with  a  view 
to  permanent  commercial  interests,  has  unfortunately,  and,  we  fear,  from 
selfish  and  individual  views,  fostered  speculation  by  reducing  her  rate  of 
discount  to  2  per  cent.,  and  soon  after,  but  too  late,  discovered  the  error, 
and  forced  her  borrowers  to  pay  from  6  to  10  per  cent. 

We  propose  to  give  the  leading  events  of  each  year,  from  1844  to 
1861,  referring  the  reader  to  authorities  where  more  copious  information 
can  be  gained  by  those  who  wish  to  study  the  invariable  connection  be- 
tween commerce  and  money. 

The  bank  shares  in  the  depressed  period  of  1847-8  fell  to  180,  after 
having  reached,  in  the  flattering  times  of  1844-5,  215  per  share,  or  115 
per  cent,  advance.  Consols,  at  the  same  depressed  period,  fell  to  VSf, 
when  starvation  stared  Ireland  in  its  face,  and  the  bank  simultaneously 
sought  protection  from  the  Cabinet. 

1844-1846. — It  may  be  well  to  add  to  Mr.  Feancis'  history  some 
materials  relating  to  the  charter  of  1844,  and  the  leading  part  taken  by 
Sir  Robert  Peel  previous  to  and  in  that  act.  Of  this  distinguished 
statesman,  Alisonj  says : 

The  truth  appears  to  be,  that  he  was  throughout,  and  in  all  his  changes, 
actuated  by  a  sincere  and  disinterested  desire  for  the  good  of  his  country  ; 
but  that  one  unhappy  mistake,  into  which  he  had  been  led,  in  the  outset  of 
his  career,  by  his  adoption  of  the  views  of  others,  rendered  him,  on  the  most 
momentous  occasions,  either  blind  to  what  that  good  really  was,  or  timorous 
in  asserting  his  own  views  regarding  it.  Without  the  advantages  of 
ancient  descent  or  aristocratic  connections,  and  the  son  of  one  who  had 
been  the  architect  of  his  own  fortune,  he  was  naturally  inclined  to  regard 
with  favor  that  mercantile  interest  to  which  his  greatness  had  been  owing. 


*  "  The  scenes  exhibited  far  exceeded  in  horror  any  thing  yet  recorded  in  European 
history." — (Alison.)  America,  in  her  own  fullness,  sent  succor  to  famished  Ireland, 
in  1847,  and  when  her  own  day  of  travail  came  near,  England  volunteered  no  helping 
hand  to  her  kindred. 

f  Alison's  Europe,  vol.  8,  pp.  4 — 6,  published  by  Harpeb  &  Beothers,  If.  T. 


Views  on  the  Currency.  349 

It  wonld  be  ffoing  too  far  to  assert,  as  Gidbon  did  of  Mr.  Fox,  that "  his  in- 
most soul  was  tinged  with  democracy  ;"  for  no  man  was  inspired  from  prin- 
ciple with  a  more  profound  respect  for  the  civil  institutions  of  his  country. 
But  this  was  the  conviction  of  reason  ;  it  was  not  the  bent  of  inclination. 
It  is  certain  that  from  early  youth  he  was  inclined  to  liberal  opinions, 
and  that  it  was  a  knowledge  of  that  which  induced  his  father,  who  was 
a  stanch  Tory  of  the  old  school,  to  throw  him  so  early  into  public  life,  in 
hopes  that,  when  in  harness,  he  would  wax  warm  in  the  contest  on  his 
own  side.  This  tendency,  unavoidable  in  one  situated  as  he  was,  was 
unfortunately  greatly  increased  by  his  early  connection  with  the  rising 
school  of  the  political  economists,  whose  opinions  on  the  all-important 
matter  of  monetary  policy  had  been  recorded  in  the  memorable  Bullion 
Report  of  1810.  The  leaders  of  this  school,  Mr.  Horner  and  Mr.  Ricardo, 
obtained  on  these  subjects  the  entire  direction  of  his  mind ;  and  it  is  to 
their  influence  that  the  parts  of  his  career,  which  otherwise  would  seem 
inexplicable,  are  chiefly  to  be  ascribed.  For  good  or  for  evil,  they  stamped 
their  impress  upon  his  mind ;  and  his  subsequent  career  bore  indelible 
marks  of  their  influence. 

His  views  on  the  Currency. — He  had  been  nominated  chairman  of  the 
Bullion  Committee  of  1819  by  Lord  Liverpool,  to  form  a  check  upon 
the  extreme  views  of  Mr.  Ricardo  and  the  economists;  but  he  soon  was 
either  convinced  by  their  arguments,  or  fell  a  prey  to  their  seductions. 
He  disdained  lucre  for  himself  or  his  relations,  but  he  worshiped  it  with, 
devout  devotion  to  his  country.  He  thought  the  country  never  could  be 
in  danger  when  its  monetary  state  was  sound,  and  that  that  depended 
entirely  on  the  retention  of  gold  by  the  Bank  of  England.  He  measured 
the  public  strength  by  the  number  of  sovereigns  in  its  vaults;  private  in- 
fluence, in  a  great  degree,  by  the  magnitude  of  balances  with  bankers. 
In  gold  he  saw  the  only  solid  and  imperishable  condensation  of  wealth ; 
in  realized  capital  the  only  secure  foundation  for  future  progress  or  accu 
mulation.  He  never  could  believe  that  the  nation  was  other  than  pros- 
perous if  the  bank  had  fifteen  millions'  worth  of  gold  in  its  coff"ers.  He 
deemed  every  attempt  to  create  or  augment  wealth  hazardous  and  delusive, 
which  was  not  based  upon  the  interest  of  its  moneyed  capital ;  every 
measure  expedient,  which  went  to  augment  the  solid  metallic  treasures  of 
the  nation.  To  that  unhappy  conviction  the  most  fatal  errors  of  his 
career  may  be  distinctly  traced.  He  lived  in  the  perpetual  dread  of  the 
nation  being  broken  down,  and  public  ruin  induced,  either  by  the  draining 
away  the  gold,  which  would  starve  industry,  or  by  the  issue  of  assignats  to 
supply  their  place,  which  would  extinguish  capital.  The  memory  of  1825, 
when  the  bullion  in  the  bank  was  reduced  to  a  million,  and  public  bank- 
ruptcy was  avoided  only  byihe  issue  of  two  millions  of  old  notes;  of 
the  dreary  years  from  1838  to  1842,  when  suffering  met  him  on  every 
side,  and  the  memory  of  which,  he  himself  said,  "  would  never  be  erased 
from  his  mind,"  were  perpetually  present  to  his  recollection.  The  cry 
"  To  stop  the  Duke,  go  for  gold,"  continually  resounded  in  his  ears. 

When  once  this  key  to  his  political  conduct  is  seized,  it  afibrds  a  satis- 
factory explanation  of  his  whole  political  career.     He  was  truly  and  sin- 
cerely patriotic,  and  actuated  on  every  occasion  by  nothing  but  a  regard 
for  what  he  deemed  the  public  good  ;  but  he,  nevertheless,  acted  on  many 
23 


350  History  of  the  Bank  of  England. 

in  direct  opposition  to  it,  from  the  unhappy  delusion  under  which  he 
labored  in  regard  to  guarding  the  treasures  of  the  Bank  of  England.  He 
was  courageous,  both  personally  and  politically,  for  himself,  but  timorous 
for  his  country.  It  is  no  wonder  he  was  so  ;  for  he  had  placed  it  on  an 
unstable  equilibrium,  and  any  considerable  concussion  might  overturn  at 
once  the  whole  fabric.  His  practical  sagacity  led  him  clearly  to  see  that 
any  serious  internal  convulsion,  and  even  the  most  inconsiderable  foreign 
war,  would  lead  to  such  a  run  on  the  bank  as  would,  in  all  probability, 
prove  fatal  to  that  establishment,  and  with  it  entirely  unhinge  the  public 
credit,  and  render  destitute  millions  of  starving  workmen.  It  was  to 
avert  this  catastrophe  that  all  his  measures  were  directed.  For  this  it 
was  that  he  emancipated  the  Catholics,  in  1829,  to  postpone  rebellion  in 
Ireland  ;  and  surrendered  Maine,  by  the  Ashburton  capitulation,  in  1842, 
to  avoid  a  rupture  with  America;  and  abandoned  the  corn  laws,  in  1846, 
to  render  England  the  great  emporium  of  corn  throughout  the  world,  and 
thereby  prevent  the  drain  which  so  nearly  proved  fatal  to  the  bank  in 
1839.  His  monetary  bill  of  1844  was  intended  to  lay  speculation  in 
irons,  and  so  prevent  the  drain  upon  the  metallic  treasures  of  the  nation, 
which  indulgence  in  it  to  excess  never  failed  to  occasion.  That  his  ap- 
prehensions were  well  founded,  the  event  has  decisively  proved  ;  the  only 
thing  to  be  wondered  at,  is  that  he  did  not  perceive  that  the  danger  was 
entirely  of  his  own  creation,  by  having  rendered  public  credit  dependent 
on  the  retention  of  gold,  and  that  the  measures  he  intended  to  avert 
were  the  greatest  possible  aggravation  of  the  evil.        *  *  * 

Owing  to  the  falling  off  in  the  American  oi'ders  for  English  goods,  and 
other  causes,  from  1838  to  1843,  power-loom  weavers  and  combers,  who 
ten  years  before  had  been  making  18s.  a  week,  could  now  only  make  6s., 
and  that  by  the  most  exhausting  and  incessant  toil.  Colliers  and  iron 
miners,  who  four  years  before  had  earned  5s.  a  day,  were  now  at  2s.  6d., 
while  wheat  was  nearly  doubled  in  price ;  and  weavers  by  the  hand-loom 
could  with  difficulty  make  3d.  a  day.  A  hopeless  paralysis  seemed  to 
have  fallen  upon  the  enterprise  and  activity  of  the  country ;  the  depres- 
sion was  universal  and  extreme,  and  continued  without  abatement  during 
the  whole  of  1842  and  the  first  half  of  1843.  The  winters  of  1841-2  and 
1842-3  were  the  most  melancholy  ever  known  in  English  history;  and 
the  only  comforting  feature  in  the  case  was  the  noble  patience  and  resig- 
nation with  which  their  sufferings  were  borne  by  the  poor.  Yet  such 
was  their  intensity,  that  the  only  surprising  thing  is  how  a  great  propor- 
tion of  them  contrived  to  prolong  existence  at  all  during  such  a  terrible 
and  protracted  period  of  suffering.  The  distress  was  so  universal  that  it 
had  ceased  to  be  matter  of  dispute ;  the  deplorable  fact  was  felt  and 
lamented  in  silence.  The  national  income  sunk  £1,200,000  from  1841 
to  1842  ;  while  the  current  expenses  were  simultaneously  increased  by  a 
similar  amount,  leaving  a  deficiency  of  £2,500,000,  which  had  to  be 
made  up  by  loan.  The  exports  and  imports  of  the  nation  exhibited  a 
similar  and  still  more  alarming  change:  the  former  had  sunk  from 
£53,000,000,  in  1839,  to  £47,000,000,  in  1842;  the  latter  increased 
from  £02,000,000,  in  1839,  to  £70,000,000,  in  1843;  the  large  balance, 
of  course,  having  to  be  paid  in  gold  or  silver,  to  the  entire  destruction, 
under  the  existing  monetary  system,  of  all  credit  and  commercial  industry 


Statistical  Details.  351 

in  the  country.  It  was  easy  to  sec  to  what  this  large  and  increasing 
balance  of  imports  over  exports  was  owing.  It  arose  from  the  great  im- 
portation of  grain  during  these  years,  in  consequence  of  the  continued 
unfavorable  harvests  and  high  prices,  which  had  swelled  from  nothing  at 
all  in  1835  and  183G,  to  ""3,000,000  quarters  in  1842.  This  great  im- 
port of  grain  cost  the  nation,  almost  all  in  gold  and  silver — wheat  being, 
on  an  average,  at  64s. — no  less  than  £10,000,000  sterling  in  one  year. 
This  state  of  things  was  suflSciently  calamitous  in  itself;  but  when  its 
effect  upon  the  currency,  and,  through  it,  on  the  whole  credit  and  indus- 
try of  the  country,  is  taken  into  view,  the  effect  became  beyond  measure 
disastrous.  The  gold  and  silver  held  by  the  Bank  of  England,  which  in 
1838  had  been  above  £10,000,000,  had  sunk,  on  15th  October,  1839,  to 
£2,545,000,  and  even  in  February,  1842,  had  only  risen  to  £5,600,000; 
as  a  necessary  consequence  of  which,  the  notes  of  the  bank  in  circulation, 
which  in  1818  had  been  £27,771,000,  with  a  population  little  more  than  "" 
half,  and  transactions  not  a  third  of  the  present,  and  in  1835  and  1836 
had  been  £19,147,000  and  £18,154,000,  respectively,  had  sunk,  at  the 
first  period,  to  £16,732,000,  and  at  the  second  to  £17,500,000.  Who- 
ever will  consider  these  figures  with  attention  will  at  once  perceive  what 
was  the  cause  of  the  universal  distress,  and  how,  under  the  existing  mone- 
tary system,  five  bad  seasons  in  succession  had  come  to  tell  with  decisive 
and  ruinous  effect  upon  the  whole  commercial  and  manufactui'ing  inter- 
ests of  the  country.  Nor  will  it  appear  surprising  that,  in  England  and 
Wales  alone,  the  paupers  had  risen  in  the  latter  year  to  1,427,000,  of 
whom  85,000  were  able-bodied,  being  about  one-eleventh  of  the  entire 
population.* 

Even  at  that  period  English  statesmen  and  merchants  had  avowed  the 
dependence  of  England  upon  the  American  market.  Lord  John  Russell 
and  Lord  PALMERSTOiif  said  in  Parliament,  in  1842:  '^We  are  not,  we 
cannot  be,  independent  of  foreign  nations,  any  more  than  they  can  of  us. 
It  is  admitted  that,  for  the  last  four  years,  2,300,000  quarters  of  foreign 
corn  have  been  imported ;  that  is  to  say,  two  millions  of  our  people  have 
been  dependent  on  foreign  countries  for  their  daily  food.  At  least  five 
millions  of  our  people  are  dependent  on  the  supplies  of  cotton  from  Ameri- 
ca, of  foreign  wool,  or  foreign  silk.  Independence  of  other  countries,  there- 
fore, is  a  chimera  xuhich  it  is  in  vain  for  a  great  commercial  nation  to  pur- 
sue ;  and  even  were  it  reached,  it  would  be  attended  with  no  visible  benefit. 
It  is  impossible  that  the  time  should  ever  arise  when  you  might  not  find 
some  part  of  the  world  from  which  you  might  derive  your  supplies.  The 
true  independence  of  a  great  commercial  nation  is  to  be  found,  not  in 
raising  all  the  produce  it  requires  within  its  own  bounds,  but  in  attaining 
such  a  pre-eminence  in  commerce  that  the  time  can  never  arise  when 
other  nations  will  not  be  compelled,  for  their  own  sakes,  to  minister  to 
its  wants.  The  duties  proposed  to  be  levied  by  the  new  scale  are  in  the 
highest  degree  prohibitory.  20s,  are  to  be  levied  on  wheat  when  the 
price  is  51s.     Now,  it  appears  from  the  consular  returns,  that  the  usual 

♦Alison's  Europe,  vol  viii.     Tooke's  History  of  Prices,  vols.  ii.  p.  386;  iii.  78; 
iv.  437,  439.     Porter's  Progress  of  the  Nation,  pp.  94,  146,  356,  475. 
f  Auson's  Europe,  vol.  viii,  pp.  12-14. 


352  History  of  the  Bank  of  England. 

price  of  wheat  free  on  board  at  Dantzic  is  40s.,  to  which,  if  10s,  6d.  be 
added  for  the  price  of  the  transit,  we  have  50s.  6d.  as  the  price  at  which 
Dantzic  wheat  can  be  sold  in  this  country.  If  to  this  you  add  20s.  duty, 
you  raise  the  price  of  imported  wheat  at  once  to  YOs.,  a  price  at  which  it 
never  can  be  imported  with  profit,  unless  prices  have  reached  famine 
levels.  Indeed,  the  new  scale  will  exclude  all  importation  till  prices  are 
above  61s.;  and  when  it  does  begin,  owing  to  the  prices  having  risen, 
and  the  harbors  being  practically  opened,  the  result  will  be,  a  great  im- 
port of  foreign  grain,  a  great  consequent  drain  on  the  bank  for  gold  to 
pay  for  it,  an  immediate  contraction  of  issues,  and  wide-spread  commer- 
cial distress.  Many  millions  must  be  paid,  and  you  have  no  means  of 
doing  so  by  sending  out  goods,  because  you  have  no  regular  trade. 
There  is  nothing  of  such  importance  to  this  country  as  to  extend  its  com- 
mercial relations  with  the  United  States  of  America.  There  are  to  be 
found  nations  rapidly  increasing  in  population  and  resources,  which  could 
furnish  you  to  any  extent  with  the  means  of  subsistence,  and  take  in  re- 
turn any  conceivable  amount  of  your  manufactures.  Around  the  great 
inland  seas,  formed  in  its  progress  to  the  ocean  by  the  St.  Lawrence,  is  a 
cluster  of  five  nations  arising,  extending  from  the  lakes,  on  the  north,  to 
the  Ohio  on  the  south.  The  territory  they  inhabit  is  twice  as  large  as 
France,  and  six  times  as  large  as  England.  It  contains  180,000,000  of 
acres,  a  large  portion  of  which  is  of  surpassing  fertility.  The  population 
of  this  cluster  of  States  already  exceeds  300,000  ;  if  the  same  rate  of  pro- 
gress shall  be  maintained  for  the  next  twelve  years,  it  will  contain, 
12,000,000.  Yet  are  they  at  such  a  distance  from  this  country  that  they 
can  never  be  formidable  competitors  to  our  farmers ;  for  even  without  a 
duty,  wheat  can  never  be  sent  from  thence  to  Britain  for  less  than  43s.  to 
4Vs.  They  would  be  glad  to  receive  your  manufactures  in  exchange  for 
the  food  which  they  send  you ;  but  how  can  they  do  so  if  you  refuse  to 
receive  their  grain,  or  do  what  is  the  same  thing,  load  it  with  such  duties 
as  make  it  not  worth  their  while  to  send  it?  Were  it  otherwise — wet'e  a 
free  commercial  intercourse  established  with  them,  there  is  no  saying  hoio 
long  you  might  continue  to  furnish  them  with  mamifactured  goods,  or  hoxo 
extensive  and  lucrative  might  he  the  commerce  you  might  carry  on  with 
them.  However  rising  may  be  the  manufactures  of  the  United  States, 
there  is  not  enough  of  that  species  of  industry,  and  probably  there  will  not 
be  for  a  very  long  time,  to  furnish  with  clothes  and  other  articles  of  rude 
comfort  this  great  population.''''* 

In  this  stage  of  the  country  Sir  Robert  Peel  brought  forward  his 
speech  on  the  finances,  and  said : 

"  What,  then,  is  to  be  done  in  this  emergency,  when  remedies  of  no 
ordinary  kind  must  be  resorted  to,  if  power  is  to  be  maintained  or  bank- 
ruptcy avoided  ?  Indirect  taxation  has  reached  its  limits,  and  can  no 
longer  be  relied  on.     Last  year  the  addition  of  five  per  cent,  on  the  cus- 

*  These  eminent  statesmen  mistook  the  powers  of  the  United  States  as  a  manu- 
facturing country;  while  more  recent  events  have  more  strongly  demonstrated 
the  dependence  of  Great  Britain  upon  the  United  States  both  for  a  supply  of  cotton, 
with  which  to  keep  England's  operatives  employed,  and  as  the  most  important 
foreign  market  for  England's  goods. 


Speech  on  the  Finances.  353 

toras  and  excise,  instead  of  producing  £5  per  cent,  as  was  expected, 
produced  only  10s.;  while  the  per  centage  of  ten  per  cent,  on  the 
assessed  taxes  produced  considerably  more  than  was  expected.  Are  we, 
then,  to  go  back  to  the  old  taxes  ?  Shall  we  restore  the  postage  duties  ? 
At  present,  the  new  packet  service  being  added,  the  post-office  produces  no 
revenue  at  all,  but  is  rather  a  charge  ;  but  the  penny  postage  has  not 
been  long  enough  in  operation  to  justify  us  in  proposing  an  alteration 
upon  it.  Are  the  taxes  to  be  restored  upon  wool,  salt  and  leather? 
That  would  be  adding  to  the  burdens  of  the  already  suffering  portion  of 
the  conmiunity,  to  the  relief  of  that  which  is  in  affluence ;  and  in  addi- 
tion, many  new  contracts  have  been  entered  into  upon  the  faith  of  their 
abolition,  and  salt,  in  particular,  has  been  applied  to  many  new  purposes. 
A  nation's  revenue  may  sometimes  be,  in  the  end,  increased  by  reduced 
taxation ;  but,  in  the  first  instance,  it  is  always  followed  by  a  great  dimi- 
nution, and  a  very  long  time  is  always  required  to  restore  the  amount. 
This  principle  is  illustrated  by  what  has  happened  with  respect  to  the  re- 
duced duties  on  wine,  tobacco,  sugar,  coftee,  hemp,  rum,  and  other  arti- 
cles. A  mere  reduction  of  duties,  therefore,  will  not  present  a  resource 
to  meet  the  present  emergency ;  and  my  settled  opinion,  my  deep  con- 
viction is,  that  it  has  become  necessary  to  make  a  great  appeal  to  the 
holders  of  property. 

"My  plan*  is  this:  to  levy  an  income  tax  not  exceeding  7d.  in  the 
pound,  or  about  three  per  cent.,  on  all  incomes  above  £150,  including  all 
funded  property,  whether  in  the  hands  of  natives  or  foreigners.  I  esti- 
mate the  incomes  of  lands  in  Great  Britain  at  £39,400,000 ;  houses, 
£25,000,000;  mines,  rail-roads,  etc.,  £8,400,000;  in  all,  £72,800,000. 
The  total  produce  of  this  tax,  excluding  Ireland,  I  estimate  at  £3,771,000. 
As  Ireland  is  to  be  withdrawn  from  the  tax,  I  propose  to  add  Is.  a  gallon 
to  the  tax  on  spirits,  the  consumption  of  which  is  again  increased,  from 
the  decline  of  the  influence  of  the  temperance  pledge.  From  this  source 
I  expect  £250,000  a  year;  and,  from  the  equalization  of  the  stamp-duty 
in  that  country  with  that  in  England,  £160,000  more.  Four  shillings  a 
ton  is  to  be  laid  on  exported  coals,  from  which  I  expect  £200,000 ;  in  all, 
£4,380,000,  which  will  cause  a  considerable  surplus  after  covering  the 
whole  deficiency  for  the  year,  which  I  estimate  at  £2,500,000.  And  then 
the  question  remains.  In  what  way  can  this  surplus  be  best  applied  to  im- 
prove the  resources  or  lighten  the  industry  of  the  nation  ?  This  surplus 
I  propose  to  apply  in  the  reduction  of  the  import  duties  in  our  commer- 
cial tariff." 

Lord  John  Russell  and  Lord  Brougham. — Against  the  tax  it  was 
urged  by  Lord  John  Russell  in  the  Commons,  and  Lord  Brougham  in 
the  Lords :  "  A  direct  tax  on  income  ought  never  to  be  resorted  to 
unless  in  some  great  emergency  of  public  affairs — when  an  extraordinary 
expenditure  has  become  necessary  for  a  time,  or  in  some  pressure  upon 

*  "  In  Denmark  the  property-tax  is  on  a  graduated  scale  in  proportion  to  the 
amount  of  the  income  enjoyed  by  the  persons  taxed,  from  whatever  source  derived. 
It  may  well  be  doubted  whether  this  is  not  confiscation  of  the  fortunes  above  the 
line  where  the  heavier  burden  begins.  But  the  curious  thing  is,  that  in  the  popular 
community,  the  injustice  perpetrated  was  on  tlie  middle  class ;  in  the  despotic  mon- 
archy, on  the  nobility  and  rich." — Doubleday's  ij/e  o/"Pekl,  ii.  347. 


354  History  of  the  BanJc  of  England. 

the  finances  of  the  country,  which  can  be  sustained  by  no  other  means. 
Such  a  tax  ought  on  no  account  to  form  part  of  tlie  ordinary  revenue  of 
the  State,  but  should  cease  with  the  necessity  which  could  alone  justify 
its  adoption  ;  inasmuch  as,  besides  all  the  other  objections  to  which  it  is 
liable,  its  inquisitorial  character  is  such  as  must  always  render  it  odious, 
however  trifling  may  be  the  amount  abstracted.  The  facility  with  which 
it  is  collected  offers  a  constant  temptation  to  extravagance  on  the  part  of 
government,  removes  the  most  important  check  upon  expenditure,  and 
dispenses  with  the  necessity  of  seeking  for  an  equality  between  income 
and  expenditure  in  economy." 

Lord  John  Russell's  amendment  was  rejected,  on  the  13th  April,  by 
a  majority  of  308  to  202,  and  on  the  30th  May  the  third  reading  was 
carried  by  a  majority  of  130.  In  the  Lords,  the  bill  passed  by  a  majority 
of  Vl.  Notwithstanding  these  large  majorities  in  both  houses,  however, 
the  change  introduced  great  alarm  into  the  country,  especially  the  grazing 
districts,  which  were  most  threatened  by  the  changes  in  the  tariif.  *  *  * 
Impartial  consideration,  now  that  their  effect  has  been  tested  by  experi- 
ence, must  lead  to  the  conclusion  that  these  changes  in  the  tariff"  intro- 
duced by  Sir  R.  Peel  were  expedient,  and  required  by  the  circumstances 
of  society.  ^  *  *  * 

This  leads  to  a  very  curious  reflection.  The  financial  situation  of  the 
nation  had  become  so  serious,  and  the  deficit  so  alarming,  that  it  had 
overturned  one  administration,  and  forced  an  entire  change  of  commercial 
policy  on  another.  The  nation  was  steeped  in  misery,  and  indirect  tax- 
ation had  reached  its  limits :  yet  foreign  affairs  had  become  so  threaten- 
ing that  a  great  increase  of  the  national  armaments  had  become  indispen- 
sable. The  whole  experience  and  talent  of  the  legislature  were  taxed  to 
the  uttermost  to  discover  a  remedy  for  these  manifold  evils,  and  none 
could  be  thought  of  but  recurring,  in  a  period  of  profound  European 
peace,  to  the  grinding  tax  heretofore  reserved  as  a  last  resource  for  the 
exigencies  and  dangers  of  war.  Yet  was  the  remedy  easy,  cheap,  certain, 
injurious  to  no  one,  profitable  to  all.  Nothing  was  required  but  to  send 
a  letter  from  the  first  lord  of  the  treasury  and  the  chancellor  of  the  ex- 
chequer to  the  governors  of  the  Bank  of  England,  authorizing  the  notes 
issued  on  securities  to  be  raised  from  £14,000,000  to  £21,000,000.  In- 
stantly despondency  would  have  been  succeeded  by  hope,  poverty  by 
comfort,  compulsory  idleness  by  willing  industry,  financial  embarrassment 
by  an  overflowing  treasury.  Nothing  but  to  confess  a  gigantic  error  was 
wanting  to  repair  boundless  calamities,  to  restore  happiness  to  a  suffer- 
ing realm.  But  to  have  done  so  required,  in  some,  the  magnanimous 
confession  of  former  mistakes ;  in  others,  a  surrender  of,  to  them,  a  most 
profitable  usurpation ;  in  all,  a  close  attention  to  a  subject  of  universal 
interest,  and  but  very  partial  comprehension.  The  proof  of  this,  how- 
ever, is  now  decisive.  Sir  Robert  Peel's  subsequent  change,  in  1844, 
without  his  designing  it,  induced  such  an  extension  of  the  currency  as 
was  required,  though  on  the  most  perilous  footing,  and  two  years  of  pros- 
perity, followed  by  a  frightful  commercial  crisis,  ensued.  Nature  gave  a 
lasting  extension  on  a  solid  foundation,  by  opening  her  reserves  of  gold 
in  1851,  and  unbroken  prosperity  has  been  the  consequence.* 

*  Alison's  Europe,  vol.  viii. 


Speech  on  the  Bank  Bill.  355 

Sir  R.  Peel's  Speech  of  1844  on  the  Bank  Bill. — "By  these  means 
the  circulation  of  the  whole  of  Eni^land  issuing  on  securities  will  be  about 
£22,000,000,  £9,000,000  being  the  proportion  of  the  country  banks  to 
£14,000,000  of  the  Bank  of  England.  The  circulation  of  the  country, 
however,  is,  and  requires  to  be,  £30,000,000,  and  it  is  the  additional 
£8,000,000  that  requires  to  be  provided  for.  This  portion  of  our  cur- 
rency must  be  based  on  gold,  for  it  is  the  portion  required  for  foreign 
commerce,  in  which  national  securities  are  of  no  avail.  The  gold  wanted 
for  this  portion  of  our  commerce  may  he  assumed  to  he  at  the  utmost 
^£8,000,000 ;  for,  before  any  thing  like  that  quantity  could  have  been 
drained  out  of  the  country,  prices  must  have  fallen  so  low  as  to  have 
caused  a  large  exportation  of  goods  and  return  of  gold.  As  the  provision 
of  this  act  is,  that  gold  is  always  to  be  in  store  beyond  the  £22,000,000 
based  on  national  securities,  there  can  be  no  fluctuation  in  the  amount  of 
paper  money  otherwise  than  in  proportion  to  the  amount  of  gold  brought 
for  sale  to  the  Bank  of  England  ;  and  as  the  bank  is  obliged  to  buy  with 
its  notes  all  the  gold  brought  to  it,  the  gold  bought  in  will  be  surely  re- 
placed by  an  equal  amount  of  paper.  When  gold,  on  the  other  hand,  is 
drawn  out,  the  paper  that  comes  in  will  be  canceled — a  necessity,  as  the 
bank  has  hitherto  immediately  re-issued  the  notes  brought  in,  thus  in- 
creasing the  drain  upon  itself,  at  the  very  moment  when  a  severe  drain 
has  set  in  of  itself."* 

Such  were  the  views  entertained  by  Sir  R.  Peel  and  the  great  major- 
ity in  both  houses  of  Parliament,  which  agreed  with  him  on  this  all-im- 
portant subject,  and  such  the  arguments  by  which  their  views  were  sup- 
ported. So  general  was  the  concurrence  in  these  views,  that  no  one 
ventured  to  oppose  them  in  either  house  on  principle,  and  the  second 
reading  passed  without  a  division.  The  only  serious  opposition  which 
showed  itself  was  to  that  portion  of  the  bill  which  went  to  affect  the  in- 
terests of  the  country  bankers,  and  the  restrictions  about  to  be  imposed 
on  their  issues.  Mr.  Hawes  was  the  exponent  of  their  views,  and  he 
moved  an  amendment  on  the  13th  June  to  the  effect,  "That  no  sufficient 
evidence  has  been  laid  before  this  house  to  justify  the  proposed  inter- 
ference with  banks  of  issue  in  the  management  of  their  issues."  "  The 
object,"  said  he,  "  of  the  present  bill  is  to  make  the  paper  circulation 
conform  more  closely  to  the  gold  circulation,  which  is  declared  to  be 
prevented  by  the  unlimited  competition  in  the  issue  of  paper.  I  deny 
that  unlimited  competition ;  for  the  convertibility  of  each  note  into  gold 
at  the  will  of  the  holder  is  a  natural  and  sufficient  check  on  an  over-issue 
of  paper.  There  is  no  foundation  for  the  doctrine  advanced  by  the  bul- 
lion committee,  that  the  diiierence  between  the  mint  and  the  market 
price  of  gold  is  the  measure  of  the  depreciation  of  the  currency.  That 
difference  is  entirely  owing  to  the  political  causes  which  create  a  greater 
demand  for  gold,  and  therefore  render  it  more  valuable  in  one  part  of 
the  world  than  another.  It  is  a  mere  gratuitous  assumption,  wholly  un- 
supported either  by  reason  or  evidence,  to  say  that  the  diflerence  is 
owing  to  over-issues.  As  little  is  the  rise  of  prices  during  the  war  to  be 
ascribed  to  that  cause.     On  the  contrary,  England  was  in  many  articles, 

*  Pari  Deb.  Ixxiv.  720,  755,  1346;  Lxxvi.  1061;  Ann.  Reg.  1844,  191,  196. 


356  History  of  the  Bank  of  England. 

especially  sugar  and  colonial  produce,  the  cheapest  country  in  the  world 
at  the  very  time  when  the  market  price  of  gold  was  25  per  cent,  above 
the  mint  price.* 

"  The  effect  of  the  government  plan  will  be  to  substitute  small  bills  of 
exchange  for  promissory  notes,  thus  establishing  a  currency  more  easy  of 
issue  and  more  dangerous  than  that  which  now  exists,  while  any  com- 
mercial crisis  pressing  upon  securities  Avill  compel  the  bank  to  draw  in 
its  notes  by  whatever  means  and  at  whatever  ruin  to  private  credit,  and 
thus  lead  to  commercial  difficulties  unprecedented  even  in  1825  and 
1839.  A  drain  of  bullion  like  that  produced  by  the  bad  harvests  of  1838 
and  1839  might  close  the  banking  department  of  the  bank,  and  lead  to 
such  distress  as  would  force  on  the  repeal  of  the  corn-laws.  If  all  restric- 
tions were  removed  on  the  issue  of  paper  save  the  one  important  one  of 
its  being  convertible  into  gold,  no  banker  could  commit  an  over-issue,  for 
it  would  come  back  upon  him  instantly  if  it  exceeded  the  wants  of  the 
country.  The  notes  in  circulation  now  are  little  more  than  half  of  what 
they  were  some  years  ago,  and  no  proof  whatever  has  been  adduced  to 
justify  the  proposed  restrictions.  It  is  the  most  palpable  injustice  to  lay 
the  whole  blame  of  over-issue  on  the  private  bankers,  and  restrict  them 
in  future  to  their  present  amount  of  issue,  without  saying  any  thing  of 
the  Bank  of  England,  with  whom  the  system  of  over-issue  always 
began." 

Upon  this  debate,  which  went  only  to  a  subordinate  part  of  the  bill, 
and  left  untouched  its  leading  principles,  the  majority  for  the  government 
was  155,  the  numbers  being  185  to  30.  A  few  small  alterations  in  de- 
tail were  afterwards  adopted,  but  an  attempt  on  the  part  of  Mr.  Muntz, 
the  member  for  Birmingham,  to  throw  it  out  on  the  third  reading,  was 
defeated  by  a  still  larger  majority,  the  numbers  then  being  205  to  18. 
In  the  House  of  Lords  the  bill  excited  very  little  discussion,  and  passed 
on  12th  July  without  a  division;  so  little  was  its  paramount  importance 
to  all  classes  of  the  community  understood  in  either  house,  save  by  its 
immediate  authors  and  promoters.  It  received  the  royal  assent  on  the 
19th  of  the  same  month. 

In  announcing  his  measure  regarding  the  currency,  which  extended 
only  to  England,  Sir  R.  Peel  declared  his  intention  of  introducing,  in 
the  next  session  of  Parliament,  a  similar  measure  applicable  to  Scotland 
and  Ireland.  Early  in  the  session  of  1845  he  proceeded  to  redeem  his 
pledge,  and  the  country  was  at  that  period  eminently  prosperous ;  and  as 
no  bad  effects  had  as  yet  been  experienced,  so  far  as  present  appearances 
went,  from  the  bill  of  the  preceding  year  relating  to  England,  the  bill 
passed  with  very  little  discussion  and  scarcely  any  opposition.  Sir  R. 
Peel  boasted,  and  apparently  with  reason,  in  bringing  it  forward,  that 
"  thus  far  experience  was  in  fevor  of  that  act;  there  had  since  been  a  pe- 
riod of  extraordinary  commercial  activity  and  speculation,  especially  in 
manufactures  and  railways,  and  a  great  demand  for  capital ;  and  the 
amount  of  gold  and  silver  in  the  Bank  of  England  was  now  £15,842,000." 
In  pursuance  of  the  principle  of  the  English  act,  it  was  proposed  to  with- 
draw all  the  present  exclusive  privileges  enjoyed  by  the  Bank  of  Ireland, 

*  Pari.  Deb.  Ixxvi.  1061;  Ann.  Reg.  1844,  205,  206;  Alison's  Europe. 


Speech  on  the  Bank  Bill.  357 

and  to  oblige  that  bank,  like  all  the  other  banks  of  issue  in  the  country, 
to  make  weekly  returns  of  the  state  of  its  business.  In  Ireland,  equally 
as  in  Scotland,  the  power  at  present  enjoyed  by  the  banks  issuing  notes 
was  to  be  continued  to  them  even  below  £5 ;  but  the  amount  to  be 
issued  by  them  was  in  future  to  be  limited,  so  far  as  issuing  on  securities 
went,  to  the  average  of  their  note  circulation  for  thirteen  lunar  months 
since  27th  April,  1844,  Any  excess  of  issue  beyond  these  sums  would 
require  in  both  countries  to  be  based  on  bullion.  No  bank  established 
after  the  date  of  this  act  was  to  have  the  power  of  issuing  notes ;  and 
Bank  of  England  notes  were  declared  not  a  legal  tender  in  Scotland. 
The  amount  of  notes  which  under  this  act  might  be  issued  on  securities 
in  Scotland  would  be  £3,041,000,  and  in  Ireland,  £6,271,000  ;  the  whole 
circulation  beyond  which  was  to  be  based  on  bullion.  Thus  was  Sir  R. 
Peel's  banking  system  finally  established  with  almost  universal  concur- 
rence in  both  islands,  and  the  amount  of  circulation  in  the  two,  taken  to- 
gether, that  might  be  issued  on  securities,  was  fixed  at  somewhat  above 
£31,000,000,  being  little  more  than  a  half  oi  what  it  had  been  at  the 
close  of  the  war.* 

It  is  difficult  to  say,  whether  what  was  said  or  what  was  left  unsaid  in 
these  all-important  debates  on  the  currency,  which  ended  in  the  entire 
establishment  of  Sir  R.  Peel's  system,  is  the  more  calculated  to  awaken 
surprise  and  suggest  reflection.  The  avowed  object  of  the  system  was  to 
check  undue  extension  of  the  circulation,  in  periods  of  speculation  and 
excitement,  by  the  over-issue  of  bankers,  and  to  provide  a  sohd  basis  for 
any  extension  of  the  currency  beyond  what  was  deemed  reasonable,  by 
compelling  it  to  be  based,  whether  issued  by  the  Bank  of  England  or 
private  bankers,  on  bullion  alone.  To  eifect  this  object,  it  was  deemed 
essential  to  compel  the  Bank  of  England  to  take  all  the  gold  which  might 
be  brought  to  it  at  a  trifle  below  the  mint  price. 

*  The  notes  now  issuable  on  securities  in  the  British  empire  were : 

Bank  of  England £  14,000,000 

English  country  banks, 8,000,000 

Bank  of  Ireland 2,7(i6,000 

Irish  country  banks, 3,565,000 

Scotch  banks, 3,041,000 

Total, £  31,312,000 

In  1815  the  notes  in  circulation  on  securities  were  : 

Bank  of  England, £  27,261,000 

English  country  banks 19,010,000 

Scotch  and  Irish  banks  (estimated,) 12,500,000 

Total £  58,771,000 

— Ann.  Reg.  1845,  p.  204  ;  Auson's  Europe. 


358  History  of  the  Bank  of  England. 


CHAPTER    II. 

FROM    THE    PASSING   OF   THE    BANK   CHARTER   ACT    IN    1844,   TO    THE    FALL    OF   SIR    ROBERT 

peel's   ministry    in  JUNE,   1846 VIEWS    OF    SIR   A.  ALISON RAILWAY    MANIA   OF    1845 

RAILWAY    FRALT)S EFFECTS    OF  OVERTRADING COMMERCIAL    POLICY  OF    SIR    ROBERT 

PEEL. 

Sir  Robert  Peel  frequently  referred  to  the  Bank  Charter  Act  of  1 844, 
and  the  adoption  of  free  trade,  as  the  main  causes  of  the  flood  of  pros- 
perity which  overspread  the  country  during  the  two  succeeding  years  ; 
and  there  can  be  no  doubt  that  he  was  so  far  right  that  the  immense 
increase  in  railway  and  other  speculations  which  then  took  place,  is  in  a 
great  degree  to  be  ascribed  to  the  facilities  for  carrying  them  on  which 
that  act  afforded.  The  bank,  now  laid  in  chains  by  government,  had  but 
one  thing  to  do,  and  that  was,  to  attend  closely  to  the  state  of  the 
exchanges  and  the  stock  of  bullion  in  its  coffers ;  to  expand  its  issues  when 
the  former  was  favorable,  the  latter  large ;  to  contract  them  when  the 
reverse  took  place.  Circumstances,  immediately  after  the  passing  of 
the  act,  were  eminently  favorable  to  the  retention  of  bullion.  The 
supplies  from  South  America,  in  consequence  of  the  cessation  of  the  des- 
olating war  of  independence,  had  become  much  more  abundant,  and  the. 
drain,  from  the  fineness  of  the  harvests,  had  become  very  inconsiderable. 
The  produce  of  gold  in  Russia  had  now  become  so  considerable*  as  to 
exercise  a  sensible  influence  on  the  money  market.  The  import  of  wheat 
in  the  years  1 843, 1 844  and  1 845  was  very  small ;  in  the  latter  of  these  years 
it  was  only  313,000  quarters.f  The  consequence  was,  that  the  bank  cof- 
fers were  overflowing,  and  Sir  R.  Peel  boasted,  in  the  pride  of  his  heart, 
as  already  mentioned  in  noticing  the  Scotch  Banking  Act  in  1845,  that 
it  had  bullion  to  the  amount  of  £15,842,000.  The  necessary  effect  of 
this  state  of  things,  according  to  the  existing  law,  was  a  very  great  issue 
of  bank-notes  by  that  establishment,  which  was  obliged  to  give  them  for 
all  the  gold  brought  to  its  doors,  and  of  course  a  corresponding  increase 

*  Produce  of   Gold  in  Russia. 


183Y, £  900,000 

1838, 1,004,000 

1839, 1,003,000 

1840, 1,125,000 

1841, 1,316,000 


1842, £  1,848,000 

1843, 2,635,000 

1844, 2,730,000 

1845, 2,792,000 

1 846, 3,414,000 


— Pari.  Papers,  Dec.  3,  1847  ;  Tooke's  History  of  Prices,  v.  537. 
■j-  Imports  of  Wheat  into  Great  Britain, 


Teart.  Quarters. 

1842, 2,997,302 

1843, 982,287 


Yeart.  Quarters, 

1844, 1,021,245 

1845, 313,245 


-Porter's  Progress  of  the  Nation,  p.  140,  3d  edit. 


Railway  Mania.  359 

in  the  issue  of  all  other  banks,  which  are  all  entirely  regulated  by  the 
proceedings  of  the  Bank  of  England.  During  the  last  half  of  1844  and 
the  next  two  years  the  average  bullion  in  the  bank  was  from  £15,000,000 
to  £16,000,000,  and  the  paper  in  circulation  from  £21,000,000  to 
£23,300,000.  The  entire  circulation  of  the  empire  during  these  years 
was  from  £40,000,000  to  £42,000,000,  while  the  gold  and  silver  was 
about  £30,000,000.  True  to  the  principle  of  the  Bank  Charter  Act,  the 
bank  directors  no  sooner  perceived  this  favorable  state  of  things  than  they 
lowered  the  rate  of  their  discount  from  4  to  2|-  per  cent.  ;  and  it  did  not 
exceed  3^-  per  cent,  till  the  beginning  of  1847,*  when  the  monetary  crisis 
was  commencing  which  terminated  so  fatally  in  the  close  of  that  year. 
It  was  impossible  that  so  great  a  fall  in  the  rate  of  discount,  and  so 
great  an  increase  in  the  circulating  medium,  could  take  place  without  a 
corresponding  rise  of  prices  in  every  thing  except  food,  which  was  kept 
down  by  the  fine  harvests ;  the  state  of  things  of  all  others  most  favorable 
to  commercial  enterprise  and  speculation  of  every  kind.f 

The  first  effect  of  this  state  of  things,  as  auspicious  in  the  outset  as  it 
was  perilous  in  the  end,  was  a  vast  increase  in  railway  speculation,  and 
the  growth  of  what  has  been  not  inaptly  called  the  Railway  Mania.  It 
was  during  the  years  1844,  1845  and  1846  that  this  system  received  its 
full  development,  and  it  was  then  pushed  to  a  degree  of  extravagance 
which  would  not  be  credited  by  future  times  if  not  attested  by  a  host  of 
contemporary  witnesses,  and  evinced  by  lasting  effects  upon  the  face  and 
fortunes  of  the  country.  Compared  with  the  fever  which  then  seized  the 
public  mind,  and  the  magnitude  of  the  speculations  in  consequence  set  on 
foot,  the  famous  South  Sea  Bubble,  and  the  corresponding  fervor  of  England 
in  1824-'25andl836-'3Y,sink  into  insignificance.  The  progressive  rise  in 
the  price  of  the  chief  articles  of  commerce  was  such  as  to  render  speculation 
of  every  kind  for  a  considerable  time  a  source  of  profit,  and  to  diminish, 
to  an  extraordinary  degree,  the  unfortunate  ones  which  terminated  in 
bankruptcy.  The  result  of  this,  as  usual,  was,  that  people  thought  that 
the  prosperity  which  had  now  set  in  would  never  cease  ;  that  the  rise  of 
prices,  which  had  proved  so  profitable  to  many,  would  continue  forever. 
It  must  be  confessed,  that  for  a  considerable  time  appearances  seemed  to 
justify  the  anticipation.  The  few  fortunate  speculators,  who  set  on  foot 
some  of  the  favorite  lines,  soon  sold  their  shares  at  such  prices  as  in  a 
few  days  enabled  them  to  realize  large  fortunes.  The  knowledge  of  this 
so  increased  the  public  anxiety  to  share  in  these  profitable  investments, 
that  these  shares  rose  every  day  higher,  and  scarcely  any  one  who  bought 

*  Bates  of  Discount  charged  at  the  Baioi,  and  Bullion  in  Circulation. 

Rati  of  Bills  under 

Teaks.  Interest,  Bullion.  Discount.  Paper  Out. 

1844— Sep.    5 2i     ..  £15,210,000  ..  £7,280,000  ..  £21,210,000 

1845— Oct..  16, 3        ..  14,190,000  ..  13,500,000  ..  23,380,000 

"   —Nov.  6, 3i     ..  13,720,000  ..  13,620,000  ..  22,890,000 

1846— Aug.27 3       ..  16,360,000  ..  11,840,000  ..  21,310,000 

— Tooke  on  Prices,  v.  565. 

f  Ausoy'&  Europe,  vol.  viii. ;  Tooke,  v.  563,  565  ;  Ann.  Reg.  1845,  1,  3;  Maet.  ii. 
627,  629;  Doubleday,  ii.  387,  388. 


360  History  of  the  Bank  of  England. 

had  not  an  opportunity  of  selling  in  a  few  days  to  advantage.  Such  was 
the  effect  of  this,  that  in  a  short  time  the  nation  seemed  to  have  lost  its 
senses. 

The  effect  of  this  universal  mania  appeared  in  a  thousand  different  ways. 
The  passion  for  gain,  now  thoroughly  awakened,  seized  upon  all  classes, 
pervaded  both  sexes,  swept  away  all  understandings.  The  grave  and  the 
gay,  the  old  and  the  young,  the  studious  and  the  volatile,  were  alike  in- 
volved in  the  vortex.  The  few  who,  ventured  to  withstand  the  torrent, 
and  to  suggest  that  the  currency  and  capital  of  the  country  were  alike 
inadequate  to  bear  the  strain  which  would  soon  be  brought  upon  them, 
were  put  aside  as  mere  alarmists,  whose  opinions  were  entitled  to  no  con- 
sideration. It  was  said  the  money  never  left  the  country,  that  it  only 
circulated  from  hand  to  hand  with  more  rapidity,  and  that  there  was 
enough  and  to  spare.  Every  one  concerned,  however  remotely,  in  the 
great  work  of  forming  the  net-work  of  railways  which  was  to  overspread 
the  country,  was  worked  to  death,  so  great  was  the  universal  anxiety  to 
get  the  Hues  forward.  Surveyors,  with  theodolites  and  chains,  were  inces- 
santly traveling  the  country  in  every  direction ;  and  when  the  proprietor 
refused  his  consent  to  their  entry,  it  was  stealthily  obtained  at  night,  or 
openly  asserted  in  daylight  by  large  bodies  of  men.  Nothing  could 
resist  the  universal  mania.  Park  walls  were  to  be  perforated,  shady  dells 
penetrated,  gardens  pierced  through,  stately  mansions  leveled  with  the 
ground,  villages  ruined,  streets  effaced,  to  make  way  for  these  gigantic 
precursors  of  human  improvement.  As  the  season  passed  on,  and  the 
30th  November,  the  last  day  for  lodging  plans  with  the  Board  of  Trade 
approached,  the  pressure  and  excitement  became  unparalleled.  Litho- 
graphers by  hundreds  were  brought  over  from  Belgium  and  France  to  aid 
in  making  the  plans ;  the  engineers  and  their  clerks  sat  up  all  night,  and 
several  of  them  in  two  years  made  large  fortunes.  On  the  evening  of 
the  closing  day  the  doors  of  the  Board  of  Trade  were  besieged  by  a 
clamorous  crowd  contending  for  admission,  as  at  the  pit  doors  of  the 
opera  when  a  popular  actress  is  to  perform ;  above  six  hundred  plans 
were  thrust  in  before  the  doors  closed  at  midnight  on  the  30th  Novem- 
ber, 1845.  The  capital  required  for  their  construction  was  £270,950,000, 
and  above  £23,000,000  required  to  be  deposited  before  the  acts  could  be 
applied  for  1 

It  may  easily  be  conceived  that  so  prodigious  and  universal  a  ferment 
in  society  did  not  take  place  without  unhinging  in  a  great  degree  the 
public  mind,  and  bringing  forward  in  the  most  dangerous  way  many  of 
the  worst  qualities  of  human  nature.  The  same  effects  on  all  classes 
which  had  been  observed  in  France  during  the  Mississippi  Bubble,  reap- 
peared in  Great  Britain,  but  on  a  much  greater  scale,  and  pervading  more 
universally  all  gradations  of  society.  The  passion  for  gain,  deemed  by 
all  to  be  within  their  reach,  seized  upon  all  classes.  Not  a  doubt  was 
entertained,  save  by  the  thinking  few,  who  were  derided  as  alarmists  and 
croakers,  of  the  possibility,  nay  certainty,  of  reaching  the  goal.  All 
classes  joined  in  it;  country  clergymen  and  curates  hastened  to  invest  the 
savings  of  their  scanty  incomes  in  the  golden  investments;  traders  and 
shop-keepers  in  towns  almost  universally  expended  their  all  in  similar 
undertakings ;  servants,  both  in  affluent  and  humble  families,  were  to  be 


Speculations  in  the  Country. 


361 


seen  on  all  sides  crowding  to  the  agents'  offices  in  the  nearest  towns,  to 
throw  their  little  savings  into  the  crucible  from  whence  a  golden  image 
was  expected  to  start  forth.  It  was  painful  to  behold  the  extent  of  the 
delusion,  mournful  to  contemplate  its  certain  consequences.  No  class,  not 
even  the  very  highest,  was  exempt  from  it.  Ladies  of  rank  and  fashion 
hastened  from  their  splendid  West  End  mansions  into  the  city  to  besiege 
the  doors  of  the  fortunate  speculators,  whose  abodes  were  deemed  a  cer- 
tain entrance  to  fabled  Avealth  ;  the  palaces  of  the  exclusives  were  thrown 
open  to  vulgar  manners  and  grotesque  habits  to  facilitate  an  entrance  into 
these  magician's  dens. 

Its  im7nediate  benefits  to  some  classes. — Doubtless  some  classes  gained, 
and  that  enormously,  by  this  universal  insanity.  The  legislatorial  attorneys, 
the  engineers  in  chief  employment,  and  the  surveyors,  rapidly  made  for- 
tunes. It  must  be  confessed  they  gave  the  public  something  very  tempt- 
ing in  appearance,  at  least,  for  their  money.  There  was  not  a  line  pro- 
posed that  was  not  supported  by  the  opinion  of  professional  men  of  the 
highest  character,  to  the  effect  that  at  least  ten  per  cent.,  probably  much 
more,  would  be  the  certain  returns  to  the  fortunate  shareholders.  Expe- 
rience ere  long  proved  that  by  doubling  the  estimated  costs,  and  halving 
the  estimated  profits,  a  much  nearer  approximation  to^the  truth  would  be 
obtained.  Under  the  influence  of  such  powerful  excitements  it  may  be 
believed  that,  without  imputing  to  any  one  deliberate  and  intentional 
falsehood,  great  exaggeration  prevailed  ;  most  erroneous  views  were  suc- 
cessfully palmed  off  upon  the  committees,  and  a  vast  amount  of  solid 
wealth  was  forever  thrown  away,  to  the  utter  ruin  of  great  numbers  of 
innocent  persons.  These  truths  were  ere  long  too  clearly  demonstrated 
by  the  result.  It  was  computed  that  no  less  than  £16,000,000  was  ex- 
pended in  surveys,  legislation,  or  litigation  connected  with  the  bills  got  up 
during  the  railway  mania  before  they  got  through  Parliament ;  of  the 
£300,000,000,*  in  round  numbers,  which  the  lines  were  computed  to  cost, 
nearly  a  third  has  never  paid  any  thing  in  the  shape  of  dividend,  and  on 
the  remaining  two-thirds  the  net  receipts,  after  deducting  the  working 
expenses,  would  not,  on  an  average,  exceed  three  per  cent.f 

Great  effect  of  these  speculations  in  the  country. — It  would  be  well  if 
the  historian  had  only  to  record  the  immediate  losses  which  arose  to  the 
parties  concerned  in  them  from  these  gigantic  undertakings.  But  unfor- 
tunately the  evil  did  not  stop  here ;  but,  on  the  contrary,  has  impressed 
its  mark  in  a  lasting  way  on  the  national  character  and  on  the  estimation 
in  which  the  legislature  is  held.     From  the  extravagant  speculations  and 


*  The  sums  authorized  to  be  expended  by  Acts  of  Parliament  on  railways  in  the 
United  Kingdom  were  as  follows  in  the  imdermentioned  years : 


1843, £  3,861,285 

1844, 17,870,361 

1845, 60,824,088 

1846, 162,026,224 

1847, 40,397,395 


1848, £  14,620,471 

1849, 3,155,332 


In  7  years, £  302,755,221 


f  Alison's  Europe,  vol.  viii. ;  Porter,  3d  edit.,  324,  326 ;  Mart.  ii.  631 ;  Double- 
day,  ii.  388,  389. 


362  History  of  the  Bank  of  England. 

unbounded  gains  and  losses  of  the  years  during  whicli  the  mania  lasted, 
may  be  dated  a  great  change,  and  one  materially  for  the  worse,  in  the 
mercantile  character  of  the  country.  The  old  English  merchant,  cau- 
tious, upright,  honorable,  lavish  in  his  charities,  economical  in  his  house- 
hold, liberal  to  others,  saving  upon  himself,  has  disappeared.  "  Namque 
avaritia  fidem,  probitatem  ceterasque  artis  bonas  subvertit;  pro  his  su- 
perbiam,  crudelitatem,  deos  negligere,  omnia  venalia  habere  edocuit. 
Ha?c  primo  paullatim  crescere,  interdum  vindicari.  Post,  ubi  contagio 
quasi  pestilentia  invasit,  civitas  immutata."  In  the  joint-stock  companies 
■which  succeeded  the  individual  direction  of  the  old  English  merchant, 
facilities  to  fraud  were  multiplied,  inducements  to  probity  taken  away. 
Forgery  and  embezzlement  hoped  for  evasion  in  the  careless  management 
of  the  many ;  honesty  and  integrity  lost  their  appropriate  reward  by  their 
fruits  being  shared  by  numbers.  Every  species  of  fraud — false  balance- 
sheets,  false  dividends,  cooked  accounts — were  perpetrated,  in  some  cases 
with  long-continued  concealment  and  immense  profits.  When,  at  length, 
the  perpetrators  of  the  iniquity  had  in  general  escaped,  aware  of  what 
was  coming,  they  had  in  time  disposed  of  their  shares  to  the  widow  and 
the  orphan,  who,  deceived  by  their  representations,  bore  the  penalty  of 
their  sins.  The  transferable  nature  of  the  shares  in  these  public  compa- 
nies added  immensely  to  the  facilities  of  fraud,  for  the  shares  could  be 
disposed  of  before  the  fraud  was  discovered.  Unfortunately,  the  legisla- 
ture itself  did  not,  in  the  general  whirl,  escape,  at  least  in  general  estima- 
tion, unscathed ;  and  the  railway  committees,  pressed  with  business  and 
distracted  by  opposite  opinions  from  witnesses  of  equal  respectability  and 
skill,  gave  such  various  and  contradictory  decisions,  that  the  public  con- 
fidence in  the  wisdom  and  disinterestedness  of  their  legislation  was,  for 
the  time,  at  least,  seriously  impaired.* 

Another  consequence,  of  a  very  curious  and  unexpected  kind,  arose 
from  the  rise  and  extraordinary  extension  of  railway  speculation  in  Great 
Britain  at  this  time,  and  this  was,  the  division  on  a  vital  question  which 
it  occasioned  in  the  landed  interest.  The  first  step  taken  by  every  rail- 
way company,  when  any  new  line  was  to  be  set  on  foot,  was  to  endeavor 
to  conciliate  the  landed  proprietors  through  whose  estates  it  was  to  pass, 
and  this  they  did  by  offering  them  shares  of  the  new  undertaking,  and 
ample  sums  in  name  of  damages  for  the  ground  taken.  If  neither  bait 
took,  and  a  squire  proved  obdurate,  he  generally  got  such  ample  damages 
from  the  juries,  who  deemed  the  railway  funds  inexhaustible,  as  entirely 
opened  his  eyes  and  altered  his  views  as  to  the  comparative  merit  of  the 
railway  and  landed  interest.  In  this  way  a  most  important  object  was 
gained,  attended  with  decisive  effects  in  the  great  contest  which  imme- 
diately after  ensued.  The  landed  interest,  hitherto  so  united,  was  divided  ; 
a  considerable  portion  of  it  came  to  regard  its  interests  as  more  identified 
with  the  railways — that  is,  the  commercial  interest,  rather  than  with  the 
fields — that  is,  the  agricultural.  It  was  the  constant  argument  of  the 
anti-corn-law  league  that  the  repeal  of  the  laws  protecting  agriculture 
would  immensely  augment  the  internal  traflSc  of  the  country,  and  that 
between  the  effects  of  large  quantities  of  grain  coming  in,  and  still  larger 

*  Alison's  Europe,  vol.  viii. 


Railway  Mania.  363 

of  minerals  and  manufactures  going  out,  an  unlimited  amount  of  carriage 
on  the  railways  migbt  with  confidence  be  anticipated.  There  can  be  no 
question  that  these  views  were,  in  fact,  at  least  well  founded ;  and  being 
presented  to  a  generation  heated  by  the  railway  mania,  and  the  very  per- 
sons most  likely,  in  the  first  instance,  to  profit  by  it,  they  proved,  Avith 
many  landed  proprietors,  extremely  serviceable.  Their  interests  as  claim- 
ants on  railways  or  owners  of  their  shares  overbalanced  their  interests  as 
proprietors  of  the  soil.  Thus,  as  the  very  time  when  the  universal  dis- 
tress arising  from  five  bad  seasons  in  succession  had  engendered  a  power- 
ful league,  which  was  making  imheard-of  eff"orts  to  abolish  every  remnant 
of  protection  to  agriculture,  an  element  to  seduction  was  thrown  among 
its  defenders,  Avhich  caused  many  of  them,  at  the  decisive  moment,  to 
disappear  from  the  ranks  in  which  they  had  hitherto  been  found.  * 

Good  effects  of  the  railway  mania  on  the  laboring  classes. — The  imme- 
diate effect  of  the  vast  expenditure  of  capital  upon  domestic  undertakings, 
which  the  raihvay  mania  occasioned,  was  immense.  The  demand  for 
laborers  was  such,  that  even  the  multitudes  of  workmen  who  came  over 
from  the  neighboring  island,  to  the  number,  at  one  time,  of  nearly  a  mil- 
lion, were  unable  to  satisfy  it.  Wages  of  all  kinds  rose  to  nearly  double 
their  former  amount.  Common  day-laborers,  instead  of  eighteen  pence, 
were  getting  half  a  crown  and  three  shillings  a  day ;  colliers  and  iron- 
miners  six  or  seven  shillings,  instead  of  three  shillings  and  sixpence  or 
four  shillings.f  The  price  of  all  the  materials  used  in  railways,  especially 
iron,  rose  to  an  extravagant  height;  in  December,  1846,  it  was  at  £12  a 
ton,  more  than  double  its  former  price.  The  immense  sums  circulated  in 
wages  augmented  to  a  very  great  degree  the  consumption  of  butcher- 
meat,  beer,  tea,  sugar  and  all  articles  of  wearing  apparel,  which  diffused 
prosperity  through  the  dealers  in  these  articles.  The  shuttle  and  the 
hammer  rang  merrily ;  joy  and  gladness,  for  a  brief  space,  pervaded  the 
land.  This  state  of  general  prosperity  was  attended,  as  is  always  the 
case,  with  one  result,  at  which  every  friend  of  mankind  must  rejoice,  a 
sensible  diminution  of  crime.     This  is  generally,  it  may  be  said  always, 

*  Alison's  Europe,  vol.  viii. 

\  The  following  figures,  quoted  by  Sir  R.  Pjcel  in  Ms  address  to  the  electors  of 
Tamworth,  prove  the  great  effect  of  the  raihvay  expenditure  in  ameliorating  the 
condition  and  enlarging  the  consumption  of  the  people : 

Articles  Consumed.  1841.  1846. 

Cocoa, lbs.  1,930,764:  ..  2,962,32'7 

Coffee, "  28,420,980  ..  36,781,391 

Currants, cwt.  190,071  ..  359,315 

Rice, "  245,887  ..  466,961 

Pepper lbs.  2,750,790  ..  3,297,431 

Sugar, cwt.  4,065,971  ..  5,231,845 

Molasses, "  402,422  ..  582,665 

Tea, lbs.  36,681,877  ..  46,728,208 

Tobacco  and  snuflF, "  22,308,385  ..  27,001,908 

Brandy, galls.  1,165,137  ..  1,515,954 

Geneva, "  15,404  ..  40,211 

British  spirits, "  20,642,333  ..  23,122,581 

Malt  charged  with  duty, bush.  36,164,446  . .  41,979,000 

— Sir  R.  Peel  to  electors  of  Tamworth,  July,  1847. — Peel's  Ilemoirs,  iL  p.  104. 


364  History  of  the  Bank  of  England. 

the  consequence  of  a  state  of  prosperity  and  a  general  increase  in  the  de- 
mand for  labor.  It  arises  in  some  degree,  without  doubt,  from  the  les- 
sening of  the  number  of  those  unhappy  persons  who  are  forced,  by  actual 
want  and  suffering,  into  the  commission  of  crime.  But  in  many  more 
instances  it  is  to  be  ascribed  to  the  giving  the  working  classes,  generally 
speaking,  full  occupation  ;  a  more  effectual  antidote  against  crime,  in  all 
ranks  of  society,  than  any  other  which  human  wisdom  has  ever  yet  de- 
vised.* 

Effects  of  the  railway  system  on  commerce  and  manufactures. — In  one 
respect,  the  general  adoption  of  the  railway  system  in  the  British  islands 
has  proved  a  lasting  benefit,  especially  to  the  commercial  and  manufac- 
turino"  classes.  It  has  in  a  manner  brought  the  different  workshops  of 
the  empire  together,  and  enabled  each  to  obtain,  in  an  incredibly  short 
space  of  time,  and  at  a  comparatively  trifling  expense,  what  it  requires 
from  the  other.  Immense  is  the  advantage  thence  accruing  to  all  the 
branches  of  manufacture ;  so  great,  indeed,  as  to  have  lengthened  the 
start,  already  sufficiently  great,  which  Great  Britain  had  acquired  over 
other  nations  in  these  respects.  To  the  agriculturists  also,  especially  in 
distant  localities,  it  has  proved  a  very  great  benefit,  by  bringing  them,  in 
a  manner,  much  nearer  their  principal  markets,  and  enabling  butcher- 
meat  and  dairy  produce  of  every  kind  to  be  brought  even  from  the  most 
distant  places  to  the  metropolis  and  great  towns ;  while  the  inhabitants 
there  have  been  equally  benefited,  by  the  lessened  price  at  which  these 
articles  can  be  purchased.  In  one  respect,  however,  it  has  been  attended 
by  a  consequence  by  no  means  equally  satisfactory,  and  which  has  already 
come  to  exercise  an  important  influence  upon  the  political  balance  and 
future  destinies  of  the  state.  It  has  enormously  increased  the  inhabit- 
ants and  wealth,  and  in  a  proportional  degree  augmented  the  political 
preponderance,  of  the  great  towns.  The  metropolis  and  the  great  com- 
mercial and  manufacturing  towns  having  become  so  easy  of  access,  the 
concourse  of  the  inhabitants  of  the  country  to  the  vast  emporiums  of 
industry,  wealth  and  pleasure,  has  been  increased  to  an  unprecedented 
decree.  The  chief  purchases,  even  by  the  inhabitants  of  the  most  distant 
counties,  are  now  made  in  them.  Their  wealth  and  population,  in  conse- 
quence, are  rapidly  augmenting,  while  the  small  towns  are  declining,  and 
in  many  of  the  rural  districts  the  numbers  of  the  people  are  rapidly 
diminishing.  London  is  now  adding  60,000  souls  annually  to  its  num- 
bers; Glasgow,  Liverpool  and  Manchester,  from  10,000  to  12,000  each; 
while  from  the  agricultural  districts  of  Ireland  2,000,000  human  beings 
have  emigrated  during  the  last  twelve  years.  This  is  a  most  serious  con- 
sideration, for  it  augments  the  resemblance,  in  many  respects  so  close, 
between  the  state  and  prospects  of  society  in  the  British  islands  and 
that  which  characterized  Italy  and  Greece  in  the  declining  days  of  the 
Roman  empire. 

Beneficial  effect  of  the  raihoay  system. — In  one  respect,  the  railway 
system  has  bequeathed  a  great  and  enduring  benefit  to  the  species,  which 
will  survive  the  empire  which  gave  it  birth.  It  has  brought  to  the  inhab- 
itants of  the  towns  the  means  of  going  to  the  country,  and  to  the  inhab- 

*  PoBTEB,  646,  658;  Tooke  on  Prices,  418. 


Railway  Mania.  365 

itants  of  the  country  the  rneans  of  going  into  the  towns.  "Railways," 
says  Miss  Martineau,  "  were  to  run  not  only  along  the  margin  of  the 
southern  part  of  the  island,  and  round  the  margin  of  the  misty  Scottish 
mountains,  but  through  the  vale  in  which  Furness  Abbey  had  hitherto 
stood  shrouded,  and  among  old  cathedrals,  of  which  the  travel^f  might 
see  half  a  dozen  in  a  day.  It  was  on  Easter  Monday,  1844,  that  excur- 
sion trips,  with  return  tickets,  were  first  heard  of.  Here  began  the  bene- 
fits of  cheap  pleasure-trips  to  the  hard  workers  of  the  nation.  The  pro- 
cess had  begun  from  which  incalculable  blessings  were  to  accrue  to  the 
mind,  morals  and  manners  of  the  people.  From  this  time  the  exclusive 
class  was  to  meet  the  humbler  classes  face  to  face.  The  peer  and  the 
m.anufacturer  and  the  farmer  were  henceforth  to  meet  and  talk  in  the 
railway  carriage,  and  have  a  chance  of  understanding  each  other.  The 
proud  were  to  part  with  some  of  their  prejudice,  and  the  ignorant  with 
some  of  their  ignorance  ;  and  other  walls  of  partition  than  park  inclosures 
were  to  be  thrown  down.  The  opeiative  was  to  see  new  sights  hitherto 
quite  out  of  his  reach — the  ocean,  the  mountain,  the  lake,  and  old  ruins, 
and  new  inventions;  and  the  London  artisan  was,  ere  long,  to  live  within 
sight  of  trees  and  green  fields,  and  yet  go  to  his  work  every  day.  As 
unwholesome  streets  in  London  were  pulled  down,  hamlets  were  to  arise 
at  a  little  distance  in  the  country,  from  which  the  humbler  classes  could 
go  and  return  to  their  daily  labor  in  the  centre  of  the  town.  The  diet  of 
millions  was  to  be  improved,  fish  and  foreign  fruits  being  conveyed  from 
the  town  into  the  country,  and  milk,  butter  and  vegetables,  fresh  from 
the  country,  into  the  towns.  Everybody's  wants  were  to  become  known 
by  the  general  communication  about  to  be  established,  and  the  supply 
was  to  reach  the  want  and  the  wish.  The  change  was  vast,  the  prospect 
magnificent;  but  this  change,  like  every  other,  had  to  pass,  at  its  outset, 
through  a  wilderness  of  difficulties." 

Bill  passes  reducing  Railway  Deposits  to  a  half. — It  can  hardly  be 
supposed  that  a  statesman  so  experienced  as  Sir  R.  Peel  was  really  de- 
ceived by  the  flattering  and  fallacious  appearances  which  the  effects  of 
the  railway  mania  at  first  exhibited,  or  that  he  imagined  present  pros- 
pects were  to  be  perpetual.  Certain  it  is,  however,  that  he  acted  as  if 
he  believed  this  really  was  to  be  the  case.  Carried  away  by  the  tumult 
of  activity  and  temporary  prosperity  which  pervaded  the  country,  he  did 
every  thing  in  his  power,  both  as  an  individual  and  the  head  of  the  gov- 
ernment, to  swell  the  mania  in  which  it  originated.  By  the  existing 
rules  of  Parliament  a  tenth  of  the  estimated  expense  of  every  railway  was 
required  to  be  deposited  before  the  bill  for  promoting  it  was  introduced. 
A  committee  was  appointed  to  consider  the  subject  in  1844,  and  it  re- 
commended that  the  deposit-money  should  be  reduced  a  half,  or  to  a 
twentieth,  which  was  immediately  made  the  foundation  of  a  bill,  which 
obtained  the  sanction  of  Parliament  in  the  same  session.  To  this  great 
concession  in  favor  of  speculation,  the  vast  increase  in  it  which  so  soon 
after  took  place,  and  the  unbounded  effects  which  thence  arose,  are  in  a 
great  measure  to  be  ascribed.  The  general  fervor  on  the  subject  was  ere 
long  still  further  inflamed  by  the  imposing  ceremony  which  took  place  at 
the  commencement  of  the  Trent  Valley  Railway,  when  Sir  R.  Peel  in 
person,  with  a  silver  trowel,  turned  up  the  first  sod,  which  was  followed 
24 


366  History  of  the  Bank  of  England. 

by  the  most  enthusiastic  speeches  on  the  unbounded  prospects  which 
these  undertakings  were  to  open  to  the  country.* 

Its  vast  Effect  in  stimulating  these  Undertakings. — To  appreciate  the 
immense  effect  this  reduction  in  the  sums  required  as  deposits  to  be  paid 
had  in  simulating  these  extraordinary  undertakings,  it  is  only  necessary 
to  refer  to  the  official  account  of  the  railways  for  which  plans  were  de- 
posited in  terms  of  the  act  of  Parliament  up  to  the  31st  December, 
1845.  The  number  of  these  lines  for  which  plans  were  lodged  was,  in 
1844,  248  ;  but  in  1845  it  bad  risen  to  the  enormous  amount  of  815  ! 
The  sums  deposited  on  the  lines  in  the  first  year  were  £6,432,155,  and 
the  estimated  sums  to  complete  the  undertakings  were  £44,927,000.  In 
the  succeeding  year,  however,  the  capital  required  to  be  paid  on  deposits 
for  new  projects  was  £59,136,000;  the  sum  of  £60,927,000  had  been 
already  expended  on  the  lines  in  the  course  of  execution ;  and  the  liabil- 
ities connected  with  the  new  projects,  after  deducting  the  deposits  paid, 
amounted  to  the  enormous  and  almosffabulous  sum  of  £590,447,000  !  It  is 
difficult  to  say  to  what  state  the  country  would  have  been  reduced  if  these 
wild  speculations  had  all  been  carried  into  execution ;  and  nothing  can 
illustrate  so  strongly  the  extreme  peril  of  the  course  on  which  govern- 
ment had  now  adventured,  in  first  passing  a  bank  charter  act,  which  in 
effect  compelled  the  bank,  and  all  other  banks,  to  lower  their  discounts  to 
three  per  cent.,  and  then  a  railway  act,  which  reduced  the  sums  required 
to  be  paid  in  deposit  on  the  projected  lines  from  ten  to  five  per  centf 

Flourishing  State  of  Trade  and  the  Revenue. — Like  many  other  rash 
and  imprudent  courses  of  conduct,  however  fraught  with  lasting  and 
perilous  consequences,  the  measures  of  government  at  this  period  were 
attended  by  immediate  and  flattering  benefits.  The  path  which  led  di- 
rectly over  the  abyss  was  in  the  outset  strewed  with  flowers.  The  pros- 
perous condition  of  all  the  great  interests  in  the  country  was  unequivo- 
cally evinced  in  the  returns  of  its  trade,  manufactures,  shipping  and 
revenue.  The  imports  between  1842  and  1847  rose  from  £65,000,000 
to  £90,000,000 ;  and  the  exports  from  £47,000,000  to  £58,000,000.  The 
revenue,  notwithstanding  a  reduction  of  taxation  in  these  five  years  of 
about  £6,000,000,  which  more  than  compensated  the  income-tax,  had 
advanced  from  £48,500,000  to  £51,500,000.  The  shipping  in  the  same 
period  rose  from  4,600,000  tons  to  above  7,000,000  tons,  indicating  an 
increase  of  at  least  fifty  per  cent,  in  the  bulk  and  weight  of  the  exports 
and  imports  of  the  country.^     All  this  took  place  not  only  without  any 

*  Alison's  Europe,  vol.  viii. ;  Doubleday,  ii.  390;  Pari.  i>e6.  Ixxiii.  516,  519; 
Ann.  Reg.  1845,  178;  M.vrt.  ii.  629. 

f  Alison's  Europe,  vol.  viii. ;  Official  Table,  Ann,  Reg.  1845, 178,  Chron. 

X   EXPOETS,   lilPOETS    AND    REVENUE    OF    GeEAT    BRITAIN,     AND    SHIPPING    AND    POOR   EaTES     OF 

England,  from  1842  to  1847,  both  included. 
Exports,  Imports,  Number  of 

Declared,  Computed  Shipping,    Poor  Rates,  Paupers, 

Teabs.  Value.  Value.  Pevemce.  Tons.  England.     England. 

1842 £47,881,023  ..  £05,204,729  ..  £48,580,026  ..  4,627,446  ..  £4,912,498  ..  1,427,187 

1848, 52,278,449  ..      70,00.3,853  ..      52,.582.847  ..  4,977,206  ..      5,208,027  ..   1,539,490 

1844, 58,584,292  ..      85,441,555  ..      54,063,754  ..  5,297,168  ..      4,970,093   ..  1,475,761 

1845, 60,111,081   ..      8.5,281.958  ..      53,000,3.54  ..  6,031,587  ..      5,039,703  ..  1,470,970 

1846, 57,786.875  ..      75,9.53,875  ..      5.3,790,138  ..  6,814,571   ..      4,9.'>4,204  ..  1,332,089 

1847, 58,842,377  ..      90,921,866  ..      51,546,265  ..  7,083,163  ..      5,2987,87  ..  1,721,356 

— Poeteb's  Progress  of  the  Nation,  pp.  356,  399,  475,  94,  90. 


Railway  Mania.  367 

increase,  but  witb  an  extraordinary  diminution  in  our  imports  of  food, 
which,  till  the  disastrous  years  of  184G  and  1847,  which  witnessed  the  Irish 
famine,  had  sunk  to  little  more  than  300,000  quarters  of  wheat  a  year  ! 
It  must  be  confessed  that  this  extraordinary  flood  of  prosperity,  enduring 
for  five  years  immediately  succeeding  a  corresponding  period  of  unmiti- 
gated adversity  whicli  had  preceded  it,  afforded  a  just  subject  of  congrat- 
ulation to  the  prime  minister,  and  seemed  to  warrant  the  confidence  of 
the  country  in  a  statesman  whose  magic  wand  had  so  quickly  converted 
desolation  and  ruin  into  riches  and  prosperity. 

Sir  R.  Peel's  favorable  Financial  Statement. — Sir  R.  Peel  made  an 
adroit  use  of  the  flood  of  prosperity  which,  from  a  temporary  cause,  was 
tlms  poured  upon  the  country,  to  carry  out,  to  a  much  greater  extent  than 
he  had  hitherto  done,  the  new  commercial  policy  with  which  he  con- 
ceived the  well-being  of  the  country  was  indissolubly  wound  up.  He 
was  enabled  to  meet  the  Parliament  of  1845  in  the  most  triumphant 
manner.  The  wisdom  of  his  policy  seemed  to  be  established,  beyond 
the  possibility  of  doubt,  by  the  result.  Instead  of  the  woful  tale  of  a 
deficit,  which  under  the  administration  of  his  predecessors  had  so  often 
sickened  the  heart  of  the  nation,  he  was  to  come  forward  with  the  glad 
tidings  of  a  large  surplus.  Supposing,  he  said,  the  property-tax  to  be 
continued,  the  revenue  in  the  year  ending  5th  April,  1846,  would  amount 
to  £53,700,000,  and  the  expenditure  would  be  only  £49,000,000,  even 
after  taking  into  account  an  increase  of  £1,000,000  for  the  service  of  the 
navy,  which  he  most  wisely  proposed.  But  as  £600,000  of  this  surplus 
consisted  of  payments  from  China,  which  would  only  continue  a  year 
more,  he  would  take  the  income  at  £53,100,000,  leaving  a  surplus  of 
£3,400,000  when  the  additional  estimates  for  the  navy  were  taken  into 
consideration.* 

Continuance  of  the  Income-Tax^  and  Repeal  of  more  indirect  Taxes. — 
"  I  now  approach,"  said  Sir  Robert,  "  the  most  important  question  of  all, 
which  is,  how  we  are  to  dispose  of  this  surplus.  I  propose  to  do  so  by 
continuing  the  incoine-tax,  and  making  a  great  reduction  in  the  duties  on 
consumption.  I  would  not  have  proposed  this  if  I  had  not  felt  the 
strongest  persuasion  that,  by  continuing  the  income-tax,  it  will  be  in  the 
power  of  the  House  to  make  arrangements  with  respect  to  taxation  which 
will  be  the  foundation  of  great  future  commercial  prosperity,  and  which 
will  add  materially  to  the  comforts  of  those  who  are  called  upon  to  con- 
tribute to  it.  In  considering  the  taxes  on  consumption  which  are  to  be 
reduced,  the  points  to  be  taken  into  view  are,  the  weight  of  the  taxes 
which  enter  into  the  price  of  articles  of  general  consumption,  those  which 
press  most  heavily  on  the  raw  materials  which  constitute  the  staple  manu- 
factures of  the  country,  the  comparative  expense  incurred  in  their  collec- 
tion, and  which  taxes,  if  removed,  would  give  most  scope  to  the  commer- 
cial enterprise  of  the  country.  These  are  the  objects  which  government 
have  had  in  view  in  the  selection  of  taxes  for  reduction,  which  I  am  about 
to  propose.  I  do  not  propose  to  maintain  any  considerable  surplus  of  in- 
come over  expenditure ;  but,  in  the  conviction  that  the  House  will  at  all 
events  maintain  public  credit,  I  shall  propose  a  reduction  of  certain  duties 

•  Auso.Vs  Europe,  vol,  viii. ;  Ann.  Reg.  1845,  24  ;  Pari.  Deb.  Isxrii.  455,  497. 


368  History  of  the  Bank  of  England. 

which  are  rather  onerous  than  productive.  First,  to  begin  with  sugar,  I 
propose  to  lower  the  duty  on  brown  muscovado  from  25s.  3d.  to  143. 
On  East  India  sugar  of  the  same  description  the  duty  to  be  18s.  8d.,  and 
on  free-labor  foreign  sugar  23s.  3d.  The  effect  of  these  changes  will  be, 
I  think,  to  lower  the  price  of  sugar  l|^d.  a  pound,  at  a  cost  to  the  revenue 
of  £1,300,000  a  year.  The  export  dutjuori  coals  I  propose  to  take  away 
altogether,  at  a  cost  of  £120,000.  On  the  raw  materials  employed  in 
manufactures,  813  in  number,  I  propose  to  remove  altogether  the  duty 
on  430,  which  will  get  rid  of  avast  number  of  troublesome  accounts,  and 
no  small  amount  of  expense  ;  and  release  altogether  from  duty  the  impor- 
tant raw  materials  of  silk,  hemp,  flax,  certain  kinds  of  yarns,  furniture 
woods,  animal  and  vegetable  manures,  and  a  great  variety  of  lesser  arti- 
cles. The  entire  loss  to  the  treasury  from  these  reductions  will  be  only 
£320,000,  and  the  relief  to  the  country  immense.  The  duty  on  cotton 
wool  is  to  be  entirely  taken  off,  at  a  loss  of  £680,000  to  the  exchequer. 
The  duty  on  glass  is  from  200  to  300  per  cent,  on  the  cost  of  the  manu- 
factured article — a  burden  which  renders  competition  impossible  with 
the  iiianufacturers  of  France,  Belgium  and  Bohemia.  I  propose  to  take 
this  tax  off  altogether,  which  will  occasion  a  loss  to  the  revenue  of 
£642,000.  These  reductions  taken  together  amount  to  £3,338,000,  be- 
ing within  a  trifle  of  the  surplus  of  £3,409,000  with  which  ihe  House  has 
to  deal.  In  consideration  of  these  reductions,  and  of  the  benefit  they 
will  confer  upon  the  country,  I  propose  the  further  continuance,  for  the 
limited  period  of  three  years,  of  the  income  tax." 

Mr.  Baring's  Objection  to  it. — On  the  other  hand,  it  was  contended  by 
Mr.  Baring  :  "  Sir  R.  Peel  originally  demanded  the  income  tax  for  three 
years  as  a  means  of  temporarily  restoring  the  revenue,  upon  the  promise 
that  the  tax,  when  this  had  been  efi"ected,  was  to  be  removed;  but  what 
is  the  state  of  the  finances  now  ?  On  the  face  of  his  own  estimate,  the 
income  in  the  ensuing  year,  if  you  deduct  from  it  the  income  tax  and  the 
Chinese  payments,  is  only  £47,900,000,  and  the  expenditure  £49,700,000, 
leaving  a  deficiency  in  the  revenue,  as  it  stood  before  it  was  laid  on,  of 
£1,800,000.  This  is  a  circumstance  well  worthy  of  consideration.  You 
imposed  the  income  tax  to  close  a  deficiency  and  compensate  a  large  re- 
duction of  indirect  taxation,  and  after  a  trial  of  three  years  in  a  period  of 
profound  and  universal  peace,  and  when  the  public  revenues  during  all 
that  time  have  been  largely  benefited  by  the  Chinese  payments,  the  in- 
come has  not  recovered  itself,  and  but  for  that  tax  the  nation  would  be 
still  in  an  annual  deficiency  of  nearly  £2,000,000.  Your  boasted  surplus 
is  entirely  made  up  of  the  income  tax;  and,  markworthy  circumstance, 
the  efi"ect  of  the  large  repeal  of  the  indirect  taxes  made  three  years  ago 
has  not  been,  as  was  predicted,  to  restore  the  revenue  in  other  quarters, 
but  were  it  not  for  the  direct  income  tax  the  exchequer  would  still  be  in 
a  state  of  lamentable  deficiency.  Sir  R.  Peel  has  calculated  the  surplus, 
even  with  the  income  tax  kept  on,  at  only  £90,000  ;  and  that  excess, 
small  as  it  is,  rests  entirely  upon  the  supposition  of  an  increased  con- 
sumption which  was  by  no  means  sure  of  being  realized.  We  are  told 
that  the  selection  of  articles  on  which  the  tax  is  to  be  remitted  has  been 
made  on  the  principle  of  being  able  to  take  oft'  the  entire  income  tax  at 
the  end  of  three  more  years ;  but  in  proceeding  on  that  supposition,  it  is 


Railway  Mania.  369 

much  to  be  feared  he  is  repeating  again  the  too  sanguine  anticipations  of 
*  Prosperity  Robinson,'  who  took  off  taxes  to  the  amount  of  three  or 
four  millions,  expecting  that  in  three  years  the  revenue  wouhl,  in  conse- 
quence, increase  five  milUons. 

"The  facts  by  no  means  warrant  these  expectations.  Nothing  is  so 
fallacious  in  principle,  or  has  been  so  often  disproved  in  practice,  as  the 
assertion,  now  so  often  repeated,  that  the  only  way  to  insure  an  increase 
of  the  revenue  is  to  lower  the  duties.  The  contrary  has  been  decisively 
established  by  experience ;  scarcely  an  instance  is  to  be  found  in  our  an- 
nals of  a  considerable  remission  of  taxation  being  followed  by  such  an 
increase  of  consumption  as  compensated  the  loss  to  the  revenue.  In 
1816  the  revenue  was  £71,900,000;  taxes  were  taken  off  to  the  amount 
of  £17,500,000;  and  in  1819  the  revenue  was  only  £52,155,000,  show- 
ing a  difference  of  £19,745,000  ;  and  proving  that  the  other  branches  of 
the  revenue,  so  far  from  having  improved  by  this  great  reduction  of  taxes, 
had  actually  fallen  off  in  the  next  three  years  by  £2,000,000,  even  after 
deducting  from  the  deficiency  the  whole  amount  of  the  taxes  remitted. 
In  the  five  years  ending  in  1826  the  taxes  remitted  were  £13,000,<)00, 
and  the  revenue  was  not  restored  by  about  £4,000,000.  In  the  three 
years  ending  in  1829  the  taxes  taken  off  were  £9,600,000;  but  even  in 
1839  the  revenue  had  not  recovered  the  loss  by  £4,600,000.  Between 
1815  and  1830  the  taxes  taken  off  were  £33,000,000  ;  and  the  loss  to 
the  revenue  was  £22,000,000.  In  the  face  of  these  facts,  so  uniform  and 
so  long  continued,  what  ground  is  there  for  believing  that  the  effect  of 
the  present  remission  of  taxes  will  be  different,  or  that  increased  con- 
sumption will  now. for  the  first  time  follow  diminished  duties?  It  is  too 
evident  that  the  expectation  is  entirely  illusory ;  increased  consumption 
will  never  compensate  seriously  diminished  indirect  taxation,  and  if  the 
house  agrees  to  remit  the  duties  on  consumption  now  proposed  for  reduc- 
tion, it  is  equivalent  to  consenting  forever  to  what  he  has  himself  called 
'  the  dire  scourge  of  direct  taxation.'  "* 

So  entirely  were  the  views  of  the  chancellor  of  the  exchequer  in  har- 
mony with  the  ideas  of  the  great  majority  of  the  house,  that  the  bill 
passed,  with  very  little  opposition,  by  a  majority  of  208,  the  numbers 
being  263  to  55. 

Sir  R.  Peel's  concluding  Address. — "  In  proposing  the  measures  of 
commercial  policy,"  said  Sir  R.  Peel,  "  which  have  disentitled  them  to 
the  confidence  of  those  who  have  hitherto  given  them  their  support,  gov- 
ernment had  no  other  desire  but  to  promote  the  good  of  the  country. 
Our  object  was  to  avert  dangers  which  we  thought  were  imminent,  and 
to  avoid  a  conflict  which  we  believed  would  place  in  hostile  collision 
great  and  powerful  classes  in  this  country.  The  love  of  power  was  not 
their  motive  ;  for  I  was  well  aware  that,  whether  accompanied  by  failure 
or  success,  one  event  must  necessarily  occur,  and  that  was  the  termina- 
tion of  the  existence  of  the  government.  I  admit  that  the  withdrawal  of 
the  confidence  of  many  of  our  friends  was  the  natural  consequence  of 
the  measures  we  proposed  ;  and  I  do  think,  when  measures  of  that  kind 
are  proposed,  at  variance  with  the  course  heretofore  proposed  by  minis- 

*  Pari.  Deh.  bocvii.  551,  554;  Ann.  Reg.  1845,  38,  39. 


370  History  of  the  Bank  of  England. 

ters,  the  natural  consequence  is  an  expulsion  from  office.  I  therefore  do 
not  complain  of  it ;  any  thing  is  preferable  to  attemptinj^  to  maintain 
ourselves  in  office  without  the  confidence  of  this  House.  There  has  been 
a  combination  which,  together  with  the  influence  of  government,  has  car- 
ried through  these  measures.  But  there  is  a  name  which  ought  to  be 
associated  with  their  success ;  but  it  is  neither  the  name  of  the  noble 
lord  opposite  (Lord  J.  Russell)  nor  is  it  mine.  Sir,  the  name  which 
ought  to  be,  and  which  will  be,  associated  with  the  success  of  those 
measures,  is  the  name  of  a  man  who,  acting,  I  believe,  from  pure  disinter- 
ested motives,  has  advocated  their  cause  with  untiring  energy,  and  by  ap- 
peals to  reason,  enforced  by  an  eloquence  the  more  to  be  admired  that  it 
was  unaflfected  and  unadorned — the  name  that  ought  to  be,  and  will  be 
associated  with  them,  is  that  of  Richard  Cobden. 

*'  I  shall  now  close  the  address  which  it  has  been  my  d'Uty  to  make, 
thanking  the  House  sincerely  for  the  favor  with  which  they  have  listened 
to  this,  my  last  address,  in  my  official  capacity.  Within  a  few  hours  the 
power  I  have  held  for  five  years  will  hav'e  passed  into  the  hands  of  another. 
I  say  it  without  repining,  and  with  a  more  lively  recollection  of  the  sup- 
port I  have  received  than  the  opposition  I  have  encountered.  I  shall,  I 
fear,  leave  office  with  a  name  severely  censured  by  many  honorable  men, 
who,  on  public  principle,  deeply  lament  the  severance  of  party  ties,  not 
from  any  selfish  or  interested  motives,  but  because  they  believe  fidelity 
to  party,  and  the  existence  of  great  parties,  to  be  powerful  instruments  of 
good  government.  I  shall  surrender  power  severely  censured  by  many 
honorable  men,  who,  from  no  interested  motives,  have  adhered  to  the 
principles  of  protection,  because  they  looked  upon  them  as  important  to 
the  welfare  and  interests  of  the  country.  I  shall  leave  a  name  execrated 
by  every  monopolist  who,  professing  honorable  opinions,  would  main- 
tain protection  for  his  own  individual  benefit.  But  it  may  be  that  I 
shall  be  sometimes  remembered  with  good-will  in  those  places  which  are 
the  abodes  of  men  whose  lot  it  is  to  labor  and  earn  their  daily  bread  by 
the  sweat  of  their  brow ;  in  such  places,  perhaps,  my  name  may  be  re- 
membered with  expressions  of  good  will,  when  those  who  inhabit  them 
recruit  their  exhausted  strength  with  abundant  and  untaxed  food,  the 
sweeter  because  no  longer  leavened  with  a  sense  of  injustice."* 


*  Alison's  Europe,  yo\,V\\i.;  Pari.  Deb.  Ixxxvii.  1054,  1056;  Ann.  Reg.  1846, 
157,  159. 


Free  Trade  and  Fall  of  Sir  Robert  Peel.  371 


CHAPTER     III. 

FROM     THE     INTRODrCnON     OF     FREE     TRADE     AND     FALL     OF     SIR   ROBERT     PEEL   IN   JUNE, 
1846,    TO    THE    SUPPRESSION    OF    TUE    CHARTIST    INSURRECTION    IN    APRIL,   1848. 

Thus  was  free  trade  introduced,  and  the  great  Tory  party  split  asunder 
by  the  act  of  its  protectionist  chief!  The  effects  of  this  change  of  poli- 
cy and  dislocation  of  parties  have  been  great  and  decisive,  and  extended 
far  beyond  the  lifetime  or  sphere  of  the  persons  who  were  instrumental 
in  bringing  it  about.  It  has  diffused,  for  a  very  long  period,  perhaps  for- 
ever, in  Great  Britain,  a  distrust  in  public  men — a  disbelief  either  in  fixity 
of  policy  or  adherence  to  principle  in  the  rulers  of  the  State. 

In  1846,  the  debate  on  colonial  sugar  and  trade  took  place.  Lord 
John  Russell  said,  "  that  sugar  had  been  virtually  excluded  from  the  mar- 
ket since  the  final  emancipation  of  the  slaves  in  183Y,  a  period  now  of 
nine  years,  and  all  the  efforts  of  the  producers  of  sugar  in  our  own  colo- 
nies have  been  unable  to  keep  pace  with  the  demand,  or  prevent  the 
price  of  the  article  rising,  as  it  is  now  doing,  to  what,  as  to  it,  amounts  to 
a  famine  level.  There  is  an  absolute  necessity,  therefore,  of  recurring  to 
the  slave  States  for  a  supply  of  this  necessary  article  of  consumption. 
Indeed,  the  exclusion  of  slave-grown  sugar,  under  the  present  prohibitory 
system,  is  impracticable,  for  the  slave  States  are  in  possession  of  treaties 
under  which  they  are  entitled  to  demand  the  admission  of  their  slave- 
grown  sugar  on  the  same  terms  as  the  most  favored  nation.  Under  the 
present  system  the  discouragement  to  slavery  in  the  slave  States  is  more 
apparent  than  real,  because  the  slave-growers  find  a  market  for  their  pro- 
duce in  other  countries  into  which  it  obtains  free  admission,  whence  they 
receive  supplies  in  return,  which  come  from  Great  Britain,  so  that  there 
is  a  virtual  exchange  of  English  manufactures  for  foreign  slave  sugar. 
The  Spanish  slave  planters  might  just  as  well  send  their  sugar  direct  to 
this  country  in  exchange  for  our  manufactures,  as  to  do  so  by  means  of 
this  intervening  transaction. 

"  If  you  admit  foreign  slave  sugar  on  any  thing  like  an  equality  with 
British  free-grown,  you  give  an  encouragement  to  slavery,  and  go  back 
upon  all  your  own  enactments  for  the  emancipation  of  the  negroes — 
though  specious  in  appearance,  has  no  solid  foundation.  No  such  bar  as 
is  contended  for  in  the  case  of  sugar  is  imposed  upon  slave  produce  in 
other  articles,  as  cotton,  tobacco,  copper  and  many  others.  Nobody  can 
deny  that  the  vast  consumption  of  these  articles,  especially  the  two  first, 
in  tins  country,  gives  an  impulse  to  slavery  in  the  United  States  ;  but  has 
any  one  yet  been  bold  enough  to  affirm  that,  before  admitting  the  Ameri- 
can cotton  into  our  harbors,  we  must  insist  on  their  solving  the  tremendous 
problem  hanging  over  their  heads  in  the  United  States,  and  emancipating 
all  the  negroes  by  whose  hands  the  cotton  has  been  raised  ?  Such  a  pro- 
posal would  be  little  short  of  insanity  ;  and  yet,  if  there  is  any  foundation 
for  the  argument  that  we  should  keep  up  the  heavy  import  duties  on  for- 


372  History  of  the  Bank  of  England. 

eign  slave-grown  sugar  to  discourage  slavery,  wc  unquestionably,  to  be  con- 
sistent, should  apply  the  same  principle  lo  American  slave-grown  cotton."* 

The  Irish  Famine. — It  is  conceded  that  the  Irish  famine  of  1846,  and 
its  effects  in  subsequent  years,  form  the  most  terrible  calamity  in  modern 
times,  and  which,  in  the  rapidity  with  which  it  mowed  down  the  human 
race,  greatly  exceeded  any  thing  recorded  in  the  annals  either  of  war  or 
pestilence.  Even  the  Moscow  retreat,  or  the  siege  of  Sebastopol,  occa- 
sioned, while  they  lasted,  a  much  less  destruction  of  mankind.  If  to  this 
we  add  the  astonishing  fact  of  an  emigration  having  taken  place  from  the 
country  to  the  extent  of  above  2,000,000  souls  in  eigJit  years  after,  it 
may  safely  be  affirmed  that  the  calamity,  both  in  present  magnitude  and 
ultimate  importance,  is  unparalleled  in  authentic  history.  It  demonstrates, 
in  the  most  striking  manner,  the  enormous  extent  of  the  social  evils  under 
which  Ireland  labored,  when  Providence  adopted  such  awful  means  to 
remedy  them,  and  strikingly  illustrates  the  limited  extent  of  human  vision 
on  the  subject,  when  narrowed  by  party  ambition.  All  that  the  collected 
wisdom  of  the  nation  in  the  House  of  Commons  could  suggest  during 
forty  years  had  been  to  admit  forty  landless  Catholics  into  Parliament, 
give  every  starving  peasant  with  £5  a  year  a  municipal  vote,  and  take 
£200,000  a  year  from  the  church  to  devote  it  to  the  purposes  of  secular 
education.  But  if  both  governors  and  governed  were  grievously  at  fault 
in  the  conduct  of  Irish  atlairs  before  the  visitation  of  Providence  fell  upon 
them,  yet  it  must  be  added,  to  their  honor,  that  both  nobly  redeemed 
their  errors  when  it  arrived.  Never  did  government  meet  a  great  national 
calamity  in  a  more  intrepid  and  generous  spirit ;  never  did  the  distant 
and  the  affluent  aid  them  more  nobly  in  their  eff'orts  to  mitigate  it ;  never 
did  the  sufferers  bear  their  pains  with  more  patience  and  magnanimity,  or 
evince  a  more  magnificent  proof  of  domestic  aflfection,  than  in  the  cttbrts 
made  by  such  as  survived  to  extricate  their  relatives  from  the  scene  of  woe. 

Lord  George  Bentinck's  jL>ro;Vc</or  Irish  Railways. — So  completely 
did  the  all-engrossing  subject  of  the  Irish  famine  absorb  the  attention 
both  of  the  legislature  and  the  public  during  this  disastrous  year,  that 
scarcely  any  other  subject  for  a  long  period  occupied  the  attention  of 
Parliament.  The  debates  on  the  subject,  however,  which  were  full,  ear- 
nest, and  full  of  patriotic  and  philanthropic  feeling,  have  lost  much  of 
their  interest  in  consequence  of  the  publication  of  the  authentic  records 
and  parliamentary  tables,  of  which  an  abstract  has  now  been  given.  One 
project  advanced  on  the  subject  deserves  particular  attention,  both  from 
the  energy  and  talent  with  which  it  was  supported,  and  the  immense 
accumulation  of  facts  bearing  on  the  state  of  Ireland  which  it  brought  to 
light.  Lord  George  Bentinck  had  meditated  deeply  on  the  condition 
of  Ireland,  and  the  means  of  aflfording  it  relief;  and  it  appeared  to  him 
that  these  means  were  to  be  found  in  the  extension  to  that  country  of  the 
causes  which  bad  relieved  Great  Britain  in  1841  and  1842.  England 
was  then  in  nearly  as  deplorable  a  state  as  Ireland  was  at  this  time.  Fif- 
teen hundred  thousand  persons  were  then  maintained  by  the  poor-rates, 
of  whom  483,000  were  able-bodied  laborers.  What,  then,  absorbed  this 
immense  mass  of  starving  proletaires,  and  induced  in  its  stead  the  vast 

*  Alison's  Europe,  vol.  viii. 


The  Panic  of  \M1 .  373 

demand  for  labor  and  general  prosperity  of  1845  and  1846  ?  It  was  ri- 
diculous to  ascribe  this  to  the  tariff  and  reduction  of  import  duties.  So 
great  a  change  could  never  have  been  produced  by  lowering  the  price  of 
bread  a  penny,  and  that  of  meat  three  half  pence  a  pound,  or  cotton  five- 
sixteenths  of  a  penny.  It  was  something  affecting  the  detnand  for  labor, 
not  the  price  of  commodities,  which  must  have  caused  the  change,  and 
what  this  something  was  could  admit  of  no  doubt.  It  was  railway  enter- 
prise which  efi'ected  the  prodigy  ;  it  was  the  expenditure  of  from  fifteen 
to  twenty  millions  on  the  wages  of  labor  annually,  for  a  course  of  years, 
which  at  once  absorbed  the  unemployed  poor,  raised  the  remuneration 
they  received,  and,  by  adding  immensely  to  their  means  of  consumption, 
caused  that  general  rise  of  prices  which  diffused  general  gladness  and 
cheerfulness  among  all  who  dealt  in  them.  It  was  by  the  extension  of  a 
similar  system  to  Ireland  that  the  general  distress  was  to  be  mitigated, 
and  labor  employed  in  a  permanently  useful  and  durable  form.  But  the 
poverty  of  the  country  precluded  the  possibility  of  this,  except  by  the  aid  of 
government.* 

The  Panic  of  1847. — The  drain  of  gold  first  became  serious  in  the 
beginning  of  April,  1847,  being  the  time  when  the  bills  drawn  to  pay 
for  the  great  importation  of  grain  and  flour,  in  the  November  and  De- 
cember preceding,  became  payable  ;  in  consequence  of  which  the  bank 
raised  the  rate  of  its  discounts  to  5  per  cent.,  it  having  been  at  3^  in  the 
beginning  of  the  year.  In  the  course  of  the  year  that  establishment 
changed  the  rate  of  its  discounts  thirteen  times  ;  and  on  the  5th  August 
it  was  advanced  to  5h,  at  which  rate  it  continued  till  25th  October.  At 
this  time  there  was  no  undue  speculation  in  any  department  of  commerce 
or  manufacture  ;  the  drain  arose  entirely  from  the  immense  balance  of 
imports  over  exports,  which  the  Irish  famine  had  so  fearfully  augmented. 
The  crisis,  especially  in  the  end  of  April,  was,  however,  dreadfully 
severe.  It  was  afterwards  stated  in  Parliament  that  the  27tli  of  that 
month  was  the  most  fearful  day  ever  known  in  the  city.  Mr.  Baring 
mentioned  the  case  of  a  gentleman  who  was  possessed  of  £60,000  in 
silver  bullion,  who  was  unable  to  obtain  the  slightest  advances  upon  it. 
The  bank  directors,  true  to  the  principle  of  the  act  of  1844,  resolutely 
threw  out  the  paper  even  of  the  richest  and  most  respectable  houses; 
and  every  other  bank  in  the  country  immediately  did  the  same.  Mr. 
Langley  mentioned,  in  the  House  of  Commons,  that  in  the  north  of 
England  25  per  cent,  was  given  for  money.  The  effects  were  immediate 
and  decisive.  Consols,  which  had  lately  been  at  93,  fell  to  85;  ex- 
chequer bills,  recently  at  14  premium,  were  at  4  discount;  mereantile 
paper,  even  of  the  very  highest  class,  could  nowhere  be  discounted.  The 
panic  was  universal  and  unprecedented. 

The  crisis  of  1847  was  unlike  any  other  that  had  ever  occurred,  and 
well  illustrated  the  working  of  the  new  law  on  the  subject.  There  was 
no  overtrading ;  there  was  no  commercial  embarrassment  irrespective  of 
the  monetary  pressure ;  the  credit  of  the  Bank  of  England  was  above 
suspicion  ;  there  was  no  run  upon  the  other  banks ;  capital  was  abun- 
dant, and  more  than  equal,  as  the  events  of  the  following  years  demon- 

*  Auson's  Europe  ;  Disraeli,  Life  of  Bentinck,  338,  339. 


374  History  of  the  Bank  of  England. 

strated,  to  all  the  undertakings  which  were  in  hand  or  in  contemplation. 
There  was  simply  and  only  a  want  of  currency*  to  make  the  advances  with, 
because  the  bank,  restrained  by  the  act  of  1844,  could  not  lend  money  with 
a  few  hundred  thousand  pounds  only  in  the  banking  department,  though 
in  the  other  end  they  had  above  £8,0C0,000  in  the  issue  department !  f 

Lord  Geo.  Bentinck  and  Mr.  Baring. — In  the  parliamentary  debate, 
Lord  George  and  Mr.  Baring  took  ground,  that  "  the  case  of  the  coun- 
try is  such  as  to  require  prompt  and  immediate  remedies.  We  are 
brought  to  a  dead-lock  for  want  of  money,  while  the  credit  of  the  bank 
is  yet  good,  and  it  has  still  £9,000,000  in  its  coffers,  which  the  bank  act 
forbids  it  to  touch.  Ought  we  not,  then,  to  remove  those  restrictions  on 
our  currency,  which  keep  us,  in  a  manner,  starving  in  the  midst  of 
plenty,  and  arc  ruining  the  trade  and  credit  of  the  country,  and  starving 
the  people,  in  order  to  feed  with  gold  that  idol  of  some  parties,  the  bank 
charter  act  ?  It  has  already  become  apparent  that  free  trade  and  a  re- 
stricted currency  cannot  work  together ;  and  since  we  have  made  our 
election  to  have  the  first,  let  us  lose  no  time  in  repealing  the  last.  We 
have  seen  the  ruinous  consequences  of  leaving  the  people  to  supply  them- 
selves, and  trusting  to  the  dogma  that  industry  will  right  itself.  There 
is  now  only  alarm  and  panic  in  this  country,  but  in  a  few  weeks  it  may 
turn  into  a  sad  reality ;  for  under  the  present  system  we  are  every  day 
getting  nearer  a  still  more  fearful  state  of  things,  the  effects  of  which  may 
be  so  disastrous  that  nothing  like  it  has  been  experienced  in  Europe. 
How  is  such  a  calamity  to  be  averted  ?  Experience  tells  us  how  this  is 
to  be  done  in  the  clearest  manner.  In  1793  our  trade  was  in  difficulties; 
Mr.  Pitt  at  once  relieved  it  by  an  issue  of  £5,000,000  to  the  mercan- 
tile interest.  In  1816,  when  there  were  two  thousand  bankruptcies  with- 
in the  year,  government  postponed  for  three  years  the  resumption  of  cash 
payments,  which  was  equivalent  to  a  large  supply  of  notes  to  the  money 
market,  and  the  country  immediately  revived,  and  enjoyed  prosperity 
till  1819,  when  cash  payments  were  resumed,  and  immediately  the  most 
fearful  distress  followed.  From  this  the  country  was  rescued  by  an  issue, 
in  1822,  of  £1  and  £2  notes,  and  an  obligation  to  allow  them  to  circu- 
late for  ten  years.  Then  came  the  terrible  crisis  of  1825-26,  when  the 
country  was  within  twenty-four  hours  of  barter.  The  crisis  was  stopped, 
not  by  any  supply  of  gold,  but  by  the  accidental  discovery  of  one  mil- 
lion £l  notes  in  an  old  box  in  the  vaults  of  the  Bank  of  England,  the 
issue  of  which  immediately  satisfied  the  wants  of  the  country.  Resting 
on  these  precedents,  I  think  myself  justified  in  calling  on  the  House  to 
set  the  Bank  of  England  free,  and  restore  confidence  to  the  mercantile 
world.  I  would  apply  to  the  bank  charter  act,  which  had  not  produced 
any  good  fruit,  the  language  which  had  been  applied  to  the  barren  fig- 
tree,  '  Cut  it  down  ;  why  cumbereth  it  the  ground  V 

"  There  is  at  present,  and  has  been  for  ten  days,  a  total  want  of  the 
means  of  obtaining  accommodation  by  the  most  solvent  houses  upon  un- 
doubted security,  and  that  because  the  Bank  of  England,  by  its  charter, 
is  unable  to  aflford  it.  I  know  an  instance  where  it  was  found  impossible 
to  raise  a  penny  upon  £60,000  worth  of  silver,  a  precious  metal  which  is 

*  For  currency  we  should  read  grain. — Ed.  f  Alison's  Europe,  toI.  viil 


Lord  George  Bentinck  and  Mr.  Baring.  375 

a  legal  tender  in  most  parts  of  the  civilized  world.  It  was  not  a  ques- 
tion" of  price  with  the  bank,  bnt  a  question  affecting  its  own  safety.  The 
bank  could  only  issue  notes  on  silver  to  the  extent  of  one-fifth  of  the 
bullion  in  the  bank ;  and  that  they  had  not,  so  they  could  not  purchase 
the  silver.  When  we  come  to  a  drain  of  gold  to  meet  an  unavoidable 
want,  there  must  be  some  means  of  avoiding  measures  by  which  the 
commerce  of  the  country  will  be  dislocated.  That  commerce  is  carried 
on  almost  entirely  on  a  system  of  credit.  If  you  drive  it  to  a  ready 
money  system,  you  at  once  paralyze  it  in  the  manufacturing  districts. 
What  is  required  is  to  give  facilities  for  exports,  in  order  to  be  able  to 
pay  for  the  corn  which  we  must  import  in  manufactured  goods  instead  of 
bullion.  But  the  houses  in  Manchester  cannot  carry  on  their  trade  on 
four  months'  bills,  which  are  valueless,  as  they  now  are,  when  they  take 
them  for  discount  into  Lombard-street,  flow  can  the  mercantile  interest 
carry  on  the  export  trade,  which  must  be  conducted  on  credit,  when  all 
accommodation  was  refused  them  ?  The  country  has  exported  perhaps 
£700,000  of  gold,  and  the  effect  of  this  export  has  been  to  destroy  pro- 
perty to  the  extent  of  £100,000,000  !  Is  there  any  necessary  connection, 
or  any  connection  other  than  that  founded  on  arbitrary  regulation,  be- 
tween these  two  things  ?  Foreign  countries  will  take  gold  to  any  extent 
at  once,  but  manufactures  they  will  only  take  as  they  want  them,  which 
is  during  a  course  of  years.  Therefore,  you  must  give  them  time  for  the 
demand  to  grow  up  and  the  supply  to  be  furnished.  But  how  is  either 
to  arise,  when  a  system  is  pursued  in  this  country  which  is  bringing  all 
our  manufactures  to  a  state  of  bankruptcy  ?* 

"  It  is  in  vain  to  ascribe  our  present  difficulties  either  to  the  extent  of 
railway  enterprise,  or  the  imprudent  conduct  of  the  Bank  of  England. 
Where  were  the  difficulties  arising  from  railways  in  August  last,  when 
the  bank  was  discounting  bills  at  2^  per  cent.,  though  bills  involving  an 
expenditure  of  £120,000,000  had  passed  Parliament?  The  true  cause  of 
the  present  embarrassment  is  the  vast  exportation  of  gold  which  has 
taken  place,  partly  to  purchase  grain,  partly  to  pay  for  the  balance  of 
unrestricted  imports.f  It  is  the  bank  act  which  is  grinding  the  trade  and 
commerce  of  the  country,  by  forcing  the  bank  directors  to  contract  their 
issues,  against  their  wish,  and  against  the  evident  interests  of  the  country, 
whenever  an  adverse  state  of  the  exchange  drives  gold  out  of  the  coun- 
try. It  has  been  said  that  '  corporations  have  no  souls ;'  but  if  it  is  so, 
I  am  sure  that  cabinets  have  no  hearts.  What  can  be  so  monstrous  as 
to  make  the  credit,  enterprise  and  industry  of  a  country,  teeming  with  all 
the  three,  stagnate  and  go  to  ruin,  merely  because  the  bank  cannot  re- 
tain in  their  coffers  gold — the  most  mercurial  and  evanescent  of  earthly 
things  ?  It  can  be  no  more  right  that  the  Bank  of  England  should  be 
tied  down  beforehand  to  a  particular  amount  of  issues,  under  various 
circumstances,  than  it  would  be  right  to  pass  a  law  obliging  ships  in  all 
weathers  to  carry  either  studding-sails  or  foresails.  By  this  law  we  are 
put  in  the  extraordinary  position,  that  though  trade  is  in  danger  of  being 

*  The  preceding  paragraph  is  taken  from  Mr.  Baring's  speech. — Pari,  Deb.  xciL 
635,  636. 

■j-  Call  it  overtrading  or  speculation. — Ed. 


376  History  of  the  Bank  of  Enrfland. 

destroyed  for  want  of  the  assistance  of  the  bank,  and  the  bank  is  both 
most  willing  and  able  to  giv'C  that  assistance,  she  is  shackled  and  pre- 
vented from  doing  so  by  the  operation  of  this  law.  It  is  just  as  if,  when 
one  strong  man  was  standing  on  the  bank  of  a  river  in  which  another 
man  was  drowning,  the  law  were  to  step  in  and  bind  the  willing  and 
ready  arras  of  him  on  the  bank,  so  as  to  make  it  impossible  to  save  the 
other  who  was  drowning."* 

Answer  of  the  Government  and  Sir  R.  Peel. — On  the  other  hand  it 
was  argued  by  the  chancellor  of  the  exchequer  (Mr.  Cardwell)  and  Sir 
Jx.  Peel  :  "  We  must  take  care  lest,  in  seeking  relief  from  the  repeal  of 
the  act  of  1844,  we  incur  the  risk  of  aggravating  incalculably  the  present 
difficulties  of  the  country.  We  are  wo-w  suffering  from  an  unexpected 
deficiency  of  food,  from  a  spirit  of  speculation  which  had  run  riot  in 
1845,  and  from  an  extraordinary  failure  of  the  cotton  crop,  which  has 
increased,  to  an  unprecedented  degree,  the  price  of  the  raw  material  of 
one  of  the  staple  manufactures  of  the  country.  There  is  no  country  ex- 
posed to  the  triple  pressure  of  three  such  causes  which  would  not  feel  it 
most  severely,  no  matter  what  modification  may  be  made  in  the  charter 
of  the  bank,  or  what  amount  of  £l  notes  it  might  have  in  circulation. 
Are  the  gentlemen  who  urge  such  measures  aware  of  the  state  of  the 
law  which  would  be  restored  if  the  bank  charier  were  repealed  ?  Are 
they  prepared  to  let  in  again  the  law  by  which  all  country  banks  were  at 
liberty  to  issue  notes  to  any  extent,  and  the  Bank  of  England  might  do 
the  same  on  its  own  responsibility,  and  without  reference  to  the  state  of 
the  exchanges  ?  In  that  case,  what  security  will  exist  against  a  recur- 
rence of  the  disorders  of  1838  and  1839  ?  The  main  object  of  the  act 
of  1844  was  to  prevent  these  disorders;  and  it  proposed  to  do  this  by 
rendering  perpetual  the  convertibility  of  paper  into  gold.  This  must  at 
all  times  limit  the  circulation,  because  the  consciousness  of  the  impend- 
ing necessity  to  pay  in  gold  will  check  imprudent  advances.  On  the 
other  hand,  this  risk  will  be  instantly  augmented  by  an  issue  of  incon- 
vertible paper  to  any  amount,  because  the  immediate  effect  of  that  will 
be  to  open*he  way  to  fresh  speculations  and  undertakings,  which  can 
end  in  nothing  but  an  increased  run  on  the  bank  for  gold. 

"  The  slightest  consideration  of  the  causes  which,  independent  of  the 
act  of  1844,  have  been  acting,  not  only  upon  this  country,  but  on  the 
whole  civilized  world,  must  convince  us  that  it  is  in  them,  and  not  in  the 
operation  of  that  act,  that  the  real  cause  of  the  distress  under  which  the 
country  is  now  laboring  is  to  be  found.  We  have  it  on  official  authority 
that  the  destruction  of  the  potatoes  and  cereal  crops  in  Ireland  alone  has 
been  to  the  extent  of  £16,000,000.  It  is  difficult  to  over-estimate  the 
effect  of  such  a  sudden  abstraction  of  capital,  especially  when  it  is  caused 
by  such  a  calamity  as  a  scarcity  of  food.  Nor  has  the  calamity  been  con- 
fined to  this  country.  Scotland,  France,  Belgium,  Holland,  have  also,  in 
some  degree,  suffered  under  it,  and  the  countries  on  the  banks  of  the 
Rhine  are  sustaining  extreme  pressure  in  consequence.  All  these  coun- 
tries are  looking  to  the  United  States  as  the  only  source  from  whence 
food  is  to  be  derived.     What  effect  must  not  that  have  had  in  paralyzing 

*  Alison's  Europe,  vol  viii. ;  Pari.  Deh.  xcii.  618,  634;  Ann.  Reg.  184T,  99,  101. 


Answer  of  the  Government.  377 

our  trade,  in  deranging  onr  ordinary  commercial  speculations,  and  de- 
priving us  of  the  usual  markets  for  our  manufactures  ?  Mr.  Baring  has 
said,  that  there  never  was  a  year  when  speculation  ran  riot  as  it  did  in 
1845.  Well,  if  men  will  speculate  and  run  riot,  depend  upon  it,  what- 
ever legislative  measures  you  may  pass  respecting  the  currency,  they  will 
inevitably  suffer  from  the  consequences  of  their  actions.  Thus,  in  ad- 
dition to  the  failure  of  food,  you  have  speculation  running  riot,  and  such 
an  investment  in  railways  that,  in  the  course  of  last  year,  applications 
were  made  to  Parliament  which,  if  all  acceded  to,  would  have  required 
£340,000,000  to  meet  the  undertaken  engagements.  In  addition  to  all 
this,  there  was  a  very  great  failure  of  the  cotton  crop,  Avhich  has  enhanced 
enormously  the  price  of  the  raw  material  of  the  great  staple  of  our 
manufacture.  How  absurd,  then,  to  charge  the  effects  of  these  great  and 
manifold  calamities  against  the  bank  charter  act ! 

"  Are  those  who  are  now  so  ready  to  throw  the  blame  of  every  disas- 
ter on  the  bank  charter  act  aware  that,  in  1814,  1815  and  1816,  when 
we  had  an  inconvertible  paper  currency,  240  private  banks  failed  ?  Re- 
collect what  took  place  in  1839,  when  the  bank  bad  the  power  of  issuing 
notes  irrespective  of  the  exchanges.  Why,  the  bank  was  then  reduced 
to  £1,600,000  in  gold,  and  there  was  every  prospect  of  its  being  unable 
to  fulfil  its  engagements.  Always  bear  in  mind  what  was  the  object  of 
the  act  of  1844.  The  main  object  of  that  act  was  to  insure  the  conver- 
tibility of  paper  into  gold,  and  to  prevent,  in  times  of  difficulty  and  dis- 
tress, the  temptation  to  which  it  is  so  easy  to  yield,  of  giving  accommo- 
dation by  issuing  paper  without  reference  to  the  exchanges,  and  thereby 
purchasing  temporary  ease  by  afterward  aggravating  the  commercial 
pressure  by  a  panic  which  leads  to  a  demand  for  gold  in  exchange  for 
paper.  It  is  of  the  utmost  importance  that,  in  those  periods  of  com- 
mercial difficulty,  we  should  not  be  exposed  to  that  other  difficulty  which 
so  much  aggravates  the  first — a  run  upon  the  bank,  in  consequence  of 
doubts  of  its  ability  to  pay  its  notes  in  gold.  What  would  be  the  state 
of  affairs  now  if,  in  addition  to  the  state  of  things  so  strongly  dwelt  on 
on  the  other  side,  we  had  a  pressure  on  the  bank  for  gold  ?  What  would 
have  been  the  state  of  things  if  the  act  of  1844  had  not  been  passed? 
Suppose  there  had  been,  on  the  part  of  every  country  bank,  while  this 
riotous  speculation  in  railways  existed,  a  power  of  fostering  it  by  uncon- 
trolled issues  of  paper ;  would  the  state  of  affairs  have  been  as  advan- 
tageous as  it  is  ?  Severe  as  I  admit  the  pressure  to  be,  and  deeply  as  I 
regret  it,  yet  can  any  man  deny  that  the  act  of  1844,  controlling  the 
issues  by  country  banks  in  a  time  of  rash  speculation,  affords  security 
for  ultimate  solvency  ?  Would  not  speculation,  without  that  check,  even 
now  admitted  to  have  run  riot,  have  precipitated  us  to  the  verge  of  ruin? 

"  It  is  said  the  government  should  possess  a  dispensing  power  to 
authorize  the  bank,  under  extraordinary  circumstances,  to  increase  their 
issues.  We  were  decidedly  of  opinion,  when  the  bank  charter  act 
was  passed,  it  should  possess  no  such  power.  The  whole  objects  of  the 
act  would  have  been  frustrated  if  it  Avas  known  that  such  a  dispensing 
powQr  existed  in  any  quarter.  If  any  functionaries,  as  the  first  lord  of 
the  treasury  and  the  chancellor  of  the  exchequer,  possessed  any  such 
power,  application  would  be  made  to  them,  from  all  quarters,  calling  on 


378  History  of  the  Bank  of  England. 

them  to  exercise  it;  the  precaution  which  individuals  ought  to  tate 
would  be  neglected,  and  every  mere  temporary  pressure  would  be  declared 
irremediable,  otherwise  than  by  the  exercise  of  the  power  so  possessed 
by  the  government.  We  were  well  aware  of  the  memorial  of  the  Lon- 
don bankers,  which  recommended  the  adoption  of  such  a  discretionary 
power  by  the  government ;  but  we  declined  to  embrace  it,  being  desirous 
to  leave  the  responsibility  of  its  banking  operations  to  the  bank  directors, 
and  to  control  them  absolutely,  as  we  have  done,  only  in  the  issue  de- 
partment. If  I  thought  that  any  relief  would  be  afforded  to  the  country 
by  a  relaxation  of  the  bank  charter  act,  no  pedantic  adherence  to  formerly 
expressed  opinions  would  prevent  me  from  recommending  it.  But  as  it 
is  my  firm  belief,  founded  on  the  information  at  present  in  my  posses- 
sion, that  any  relaxation  of  the  act  authorizing  the  issue  of  £2,000,000 
of  notes  on  exchequer  bills  would  only  aggravate  the  evil,  and  purchase 
present  relief  by  future  suffering,  I  feel  it  my  duty  to  give  it  my  most 
decided  opposition.  Depend  upon  it,  if  you  attempt  to  purchase  present 
relief  by  endangering  the  convertibility  of  paper,  you  will  inflict  a  severe 
blow  on  the  prosperity  of  the  country  ;  you  will  shake  all  confidence  in 
the  medium  of  exchange,  and  depreciate  the  value  of  property  of  every 
description."* 

No  resolution  of  the  House  followed  on  this  debate,  as,  in  truth,  a 
motion  of  a  mere  formal  nature  was  alone  before  it  when  it  took  place. 
The  decided  opinion,  however,  expressed  by  ministers  and  Sir  R.  Peel, 
against  any  modification  of  the  bank  act,  had  a  great  effect,  and  encour- 
aged the  directors  of  the  bank  in  that  steady  refusal  of  accommodation 
which,  while  it  averted  the  danger  from  themselves,  did  so  only  by 
spreading  it  fearfully  throughout  the  community.  Some  gold  arrivals, 
however,  came  opportunely  at  this  time,  which  postponed  the  risk ;  and 
the  bank  directors,  encouraged  by  this  circumstance,  at  the  suggestion  of 
the  chancellor  of  the  exchequer,  considerably  augmented  their  discounts, 
which  had  the  effect  of  materially  relieving,  in  the  mean  time,  the  press- 
ure on  the  money  market,  and  postponing,  till  the  end  of  autumn,  the 
catastrophe  which  was  approaching. 

This  debate,  however,  is  highly  interesting,  not  merely  as  containing 
an  admirable  summary  of  all  that  either  was  or  could  be  advanced  on 
either  side  of  this  all-important  subject,  but  as  evincing  a  striking  in- 
stance of  the  rhetorical  skill  of  the  very  eminent  statesman  who  took  so 
prominent  a  part  in  defence  of  the  bank  charter  act.  It  is  not  easy  to 
say  which  is  most  to  be  admired — the  cogency  of  the  arguments  adduced 
on  his  own  side  of  the  question,  or  the  skill  with  which  he  evaded  every 
consideration  which  tended  to  the  other  side.  Sir  R.  Peel  observed, 
with  truth,  that  one  cause  of  the  monetary  crisis  of  1847  was  the  coun- 
try having  "run  riot"  in  1845  with  railway  speculations;  but  he  forgot 
to  add,  what  was  equally  true,  that  that  very  "running  riot"  had  been 
induced  by  his  own  measure  in  reducing  the  deposits  on  railway  shares 
from  10  to  5  per  cent.,  and  the  effect  of  the  bank  act  itself,  which  imme- 
diately threw  down  the  rate  of  discount  from  4  to  2^  per  cent.      He 

*  Alison's  JS'wropc ;  Pari.  Deb.  xcii.  658,  690;  Ann.  Reg.  1847,  103,  105, 


Commercial  Embarrassments.  3Y9 

dwelt  with  justice  and  force  on  the  aggravation  which  the  railway  mania 
would  have  received  from  an  unlimited  issue  of  notes  by  irresponsible 
country  bankers  when  it  was  going  on  ;  but  he  seemed  to  be  insensible 
to  the  far  more  serious  aggravation  which  it  had  received  from  that  act, 
which  compelled  the  bank  to  purchase  every  ounce  of  gold  brought  to 
its  doors,  and  thus  rendered  inevitable  the  efflux  of  notes,  whether  re- 
quired or  not,  simultaneously  with  the  influx  of  foreign  treasure.  lie 
dwelt  on  the  vehement  excitement  and  excessive  undertakings  of  the  last 
three  years,  forgetting  that  this  excitement,  and  the  demand  for  labor 
consequent  on  it,  had  been  the  subject  of  constant  and  just  self-congratu- 
lation by  him  when  it  was  going  on,  and  was  ascribed  by  him  entirely  to 
his  own  free-trade  measures.  He  described,  with  force  and  justice,  the 
grievous  nature  of  the  deficiency  of  £16,000,000  in  agricultural  produce, 
which  had  arisen  from  the  potato  rot  in  Ireland,  and  the  necessary  de- 
rangement of  the  currency,  which  resulted  from  the  purchase  of  so  large 
a  part  of  the  national  subsistence  with  gold;  forgetting  that  this  casual 
and  passing  calamity  was  what  his  free-trade  measures  had  rendered  the 
chronic  and  settled  malady  of  the  country.  He  dwelt  on  the  inconve- 
niences arising  from  the  high  price  of  cotton,  in  consequence  of  a  short- 
coming of  the  crop  in  1846;  forgetting  how  much  the  effects  of  that 
scarcity  had  been  aggravated  by  the  free-trade  measures  which  had  ren- 
dered the  importation  of  that  article  so  immense  in  the  two  preceding 
years.* 

Commercial  Emharrassments. — It  was  no  wonder  that  the  attention  of 
the  country  was  fixed  on  other  objects  than  the  hustings,  for  the  appear- 
ances in  the  commercial  world  had  now  become  threatening  in  the  ex- 
treme. The  panic,  which  had  been  so  severe  in  April,  had  indeed 
passed  away,  chiefly  from  the  announcement  received  in  the  beginning  of 
May  that  the  Emperor  of  Russia  was  about  to  invest  a  portion  of  his  ac- 
cumulated treasure,  amounting  to  30,000,000  silver  roubles,  (£4,750,000,) 
in  the  public  funds  of  France  and  England.  This  vs^as  the  first  time  that 
the  gold  mines  of  the  Ural  mountains,  now  producing  £3,000,000  annu- 
ally, had  been  brought,  on  a  large  scale,  to  bear  on  the  money  market  of 
Western  Europe,  and  the  effect  was  very  considerable,  chiefly  by  dimin- 
ishing the  terror  of  an  increased  demand  for  gold  to  pay  for  the  immense 
importations  of  food  which  were  still  going  on.  The  season  also  was  fa- 
vorable, and  hopes  were  entertained,  which  were  happily  more  than  real- 
ized, of  an  abundant  harvest  in  autumn.  From  this  cause,  joined  to  the 
great  amount  of  the  imported  grain,  the  prices  of  food  fell  considerably 
in  the  end  of  May  and  beginning  of  June ;  but  the  pressure  for  money, 
owing  to  the  combined  effect  of  the  immense  importations  and  heavy 
railway  calls,  was  such  that  no  reduction  of  the  current  rate  of  interest 
took  place,  which  still  remained  at  five  per  cent.  The  sums  lent  abroad 
in  that  year  were  £33,000,000,  and  the  expenditure  on  railways 
£47,000,000. 

Increased  Monetary  Pressure  in  Au(/tist. — These  causes  necessarily  re- 
newed the  pressure,  and  it  became  very  severe  in  August,  when  the  rate 
of  discount  at  the  bank  rose  to  5^,  while  the  bank  reserve  sunk  to 

*  Alison's  Europe,  vol.  viiL  ;  Tooke,  iv,  312,  314. 


380  History  of  the  Bank  of  England. 

£4,704,000  against  £14,000,000  liabilities;  and  consols,  which  had 
stood  at  93  in  the  beginning  of  the  year,  fell  rapidly  to  85.  These  were 
sufficiently  strong  premonitory  symptoms,  but  the  government  did  not 
take  the  alarm,  and  persisted  in  the  belief  that,  under  the  admirably  con- 
structed self-balancing  system  of  1844,  the  currency  would  right  itself 
without  any  serious  detriment  to  the  general  interests  of  the  community. 
This  idea  was  increased  by  the  fineness  of  the  season  and  abundance  of 
the  harvest,  which  was  so  remarkable  that,  on  the  suggestion  of  the  gov- 
ernment, a  general  thanksgiving  was  returned  to  Almighty  God  for  the 
blessing.  But  though  this  lessened  a  danger  of  one  kind,  it  induced  an- 
other hardly  less  serious,  which  was  the  immediate  cause  of  bringing  on 
the  catastrophe  which  was  approaching.  One  after  another  the  greatest 
houses  in  the  corn  trade  came  down,  and  with  them  a  whole  host  of  the 
lesser  firms  engaged  in  the  same  traffic,  or  involved  with  them  in  busi- 
ness. The  effect  of  these  failures,  of  course,  was  to  augment,  in  a  most 
serious  degree,  both  the  demand  for  money  and  the  general  alarm. 
Every  thing  tended  to  the  same  point,  and  that  was  an  augmented 
pressure  on  the  bank  for  advances  which  the  bank  charter  act  left  them 
absolutely  without  the  means  of  meeting.  Free  trade  had  landed  the 
country  in  a  balance  of  imports  over  exports,  requiring  for  the  most  part 
to  be  paid  in  gold,  which  had  come  now  to  exceed  £40,000,000  a  year; 
the  Irish  famine  had  sent  half  as  much  out  of  the  country  to  buy 
food  ;  railway  undertakings  required  an  expenditure  at  home  of  above 
£40,000,000  a  year,  and  the  great  houses  which  had  so  largely  imported 
grain  were  assailed  by  a  fall  in  the  article  to  little  more  than  half  of  its 
prices  three  months  before.  Never  was  there  a  time  in  European  history 
when,  from  the  combination  of  so  many  concurring  causes,  large  bank 
advances  to  support  credit  and  carry  on  undertakings  were  so  loudly 
called  for,  and  the  bank  had  ample  means  to  meet  them,  for  they  had 
still  £9,000,000  in  their  coffers.  But  here  the  bank  charter  stepped  in 
and  locked  up  £8,000,000  sterling,  amidst  the  universal  pressure,  in  the 
issue  department.  Reduced  to  £1,000,000  in  the  banking  department, 
the  directors  were  compelled  to  be  extremely  cautious,  and  accordingly 
on  1st  October  they  intimated  that  "  5|-  would  be  charged  on  all  bills 
falling  due  before  the  15th  October,  and  that  they  declined  to  make  any 
advance  on  stock  or  exchequer  bills."* 

Commercial  Bankruptcies. — This  announcement  produced,  as  might 
have  been  expected,  a  fearful  impression  on  the  stock  exchange.  Consols 
rapidly  fell  from  85  to  S3|^;  exchequer  bills  were  at  37s.  discount;  and 
such  was  the  pressure  for  money  that  interest  at  the  rate  of  50  per  cent, 
was  given  for  the  use  of  it  for  only  nine  days.  The  failure  of  mercantile 
firms  of  the  oldest  standing  and  the  highest  respectability,  beginning  with 
that  of  GowER,  Nephews  &  Co.,  soon  became  very  frequent,  and  much 
exceeded  in  amount  any  thing  recorded  in  British  history,  the  severe 
monetary  crisis  of  1825  itself  not  excepted.  It  soon  appeared  that  the 
crash  was  not  to  be  confined  to  the  grain  trade,  in  which  it  had  begun, 
but  extended  to  other  branches  of  business  and  banking  firm^.  On  13th 
October,  the  Abingdon  old  bank  came  down ;  this  was  followed,  on  the 

*  Alison's  Europe,  vol.  viil ;  Tooke,  iv.  314,  315 ;  Economist,  Oct.  9,  1847. 


Suspension  of  the  Bank  Charter  Act.  381 

18th,  by  the  stoppage  of  the  Royal  Bank  of  Liverpool,  which  was  the 
more  alarming  as  its  paid-up  capital  was  known  to  be  £800,000,  and  it 
stood  in  the  very  front  rank  of  the  banking  institutions  of  the  kingdom. 
Consols,  in  consequence,  fell  to  V7f — a  fall  of  15  per  cent,  from  what 
they  had  been  three  months  before,  and  the  lowest  point  they  reached 
during  the  crisis.  Important  bank  failures  ensued  in  Liverpool,  Manches- 
ter, Lancashire  and  Newcastle.  In  the  last-mentioned  town  the  banking 
discredit  was  exceedingly  severe,  and  the  most  important  bank  in  the 
district  had  a  very  narrow  escape  from  a  suspension  of  payment.*  The 
Bank  of  England  reserve  sunk,  between  16th  and  30th  October,  from 
£3,070,000  to  .£1,600,000,  against  £13,900,000  liabilities,  and  the  bul- 
lion in  both  departments  was  only  £8,300,000  on  23d  October,  while 
the  notes  in  circulation  still  amounted  to  £21,200,000.  In  a  word,  the 
two  weeks  ending  23d  October  were  an  uninterrupted  progression  of  dis- 
aster, discredit  and  dismay ;  and  at  the  close  of  the  week  every  thing 
portended  not  merely  a  crisis,  but  a  total  suspension  of  all  business  and 
of  all  payments. 

Suspension  of  the  Bank  Charter  Act,  October  25. — Still  government, 
supported  by  Sir  R.  Peel,  stood  firm.  The  most  earnest  representations 
were  made  to  them  as  to  the  state  of  the  country,  and  the  imminent  ruin 
which  threatened  the  whole  of  its  commerce  if  the  bank  charter  act  were 
not  suspended,  without  effect.  A  most  respectable  deputation  from 
Liverpool,  representing  the  trading  interests  of  that  great  emporium,  was 
coolly  dismissed  with  an  answer  that  the  bank  act  must,  at  all  hazards, 
be  maintained.  A  highly  important  communication  from  the  Marquis  of 
Londonderry,  as  lord-lieutenant  of  the  county  of  Durham,  portraying  the 
tremendous  risk  to  which,  from  the  suspension  of  credit  and  the  want  of 
money,  the  coal  districts  in  that  county  were  exposed,  met  with  no  better 
success.  Even  an  earnest  request  for  assistance  from  the  Scotch  banks, 
hitherto  deemed  so  flourishing,  failed  in  shaking  their  steady  resolve  to 
maintain,  at  all  hazards,  the  convertibility  of  a  Bank  of  England  note. 
But  at  length  they  were  assailed  in  a  quarter  where  they  had  no  defence, 
and  the  country,  in  consequence,  was  saved.  On  Friday,  22d  October, 
the  London  bankers  had  a  meeting,  at  which  it  was  agreed  that,  if 
government  would  not  sanction  a  deviation  from  the  act  on  the  part  of 
the  bank,  they  would  withdraw  their  whole  balances  from  it.  This  was 
decisive.  The  bankers'  balances  in  the  hands  of  the  Bank  of  England 
were  £1,774,472,  and  the  reserve  in  the  bank,  to  meet  this  amount,  was 
only  £  1,600, 02 5.f     In  these  circumstances,  submission  was  a  matter  of 

*  TooKE,  iv.  316,  317,  445,  446;  Economist,  October  23,  1847;  Chancellor  of 
Exchequer's  Statement,  November  30,  1847. 

f  "  Question  2,881. — Supposing  the  London  bankers  had  been,  from  the  pressure 
upon  them,  obliged  to  withdraw  a  large  amount  of  the  balance  which,  I  believe, 
equalled  pretty  nearly  the  amount  of  your  reserve  on  the  22d  October,  what  would  have 
been  the  effect?  On  the  22d  October,  the  reserve  in  London  was  £1,600,025,  and 
in  the  country  £776,447,  making  together  £2,376,472.  The  bankers'  balances  were 
£1,774,472.  Supposing  their  balances  had  been  withdrawn  from  us  in  the  course 
of  business,  we  should  have  had  an  opportunity  of  going  into  the  market,  and,  by 
selling  securities,  we  should  have  strengthened  ourselves  by  taking  notes  out  of  the 
market,  and  then  met  the  bankers'  demand." — Mr.  Morris'  (the  governor  of  the 
Bank  of  England)  examination;  Mrst  Report  on  Commercial  Distress,  1848,  p.  221. 
25 


382  History  of  the  Bank  of  England. 

necessity.  The  bankers'  resolution  was  communicated  to  government  on 
Saturday,  23d,  and  early  on  Monday,  25th,  the  celebrated  letter,  signed 
by  Lord  John  Russell  and  the  chancellor  of  the  exchequer  was  sent  to 
the  bank,  authorizing  a  deviation  from  the  act.*  That  which  neither  a 
representation  of  the  impending  ruin  of  Liverpool  and  the  manufacturing 
districts  of  Lancashire,  nor  the  prospect  of  a  hundred  thousand  colliers 
being  thrown  out  of  bread  in  the  mining  districts  could  effect,  was  at 
once  brought  about  by  the  dread  of  the  bank  being  "  checked  out,"  in 
mercantile  phrase,  by  the  drafts  of  the  London  bankers.  The  bank  was 
authorized  to  issue  notes  beyond  the  limit  prescribed  by  the  act;  and,  in 
the  mean  time,  the  rate  of  interest  was  fixed  at  8  per  cent. 

Reflections  on  this  Change. — Thus  did  the  famous  bank  charter  act, 
after  having  been  three  years  in  unrestrained  operation,  break  down  from 
the  effect  of  its  own  provisions,  but  not  until  it  had  brought  the  country 
to  the  very  verge  of  ruin  ?  In  the  first  two  years  of  that  period,  it  had 
inflamed  to  a  most  perilous  degree  the  prevailing  passion  for  speculation, 
and  set  on  foot  undertakings  of  the  most  gigantic  kind,  which  required 
all  the  disposable  capital  of  the  country  to  carry  forward  and  complete. 
During  the  last  year,  it  acted  not  less  powerfully  in  contracting  the  circu- 
lation and  suspending  credit,  at  the  very  time  when  both  were  most 
imperatively  required  to  carry  forward  the  undertakings  which  itself  had 
set  on  foot,  and  meet  the  effects,  in  the  drain  of  gold,  of  the  combined 
operation  of  the  system  of  free  trade,  recently  introduced,  and  the  Irish 
famine,  then  in  its  full  intensity.  At  this  critical  juncture,  when,  beyond 
any  other  recorded  in  British  history,  liberal  paper  advances  were  most 
called  for  to  sustain  the  credit  and  currency  of  the  country,  now  strained 
to  the  uttermost  by  so  many  concurring  causes,  the  bank  notes  in  circu- 
lation in  the  two  islands  were,  by  the  operation  of  the  bank  charter  act, 

CONTRACTED    TO    THE    EXTENT    OF    EIGHT    MILLIONS    bcloW    what    they    had 

been  less  than  two  years  before.  It  may  safely  be  affirmed  that  a  more 
ruinous  and  suicidal  act  never  w^as  perpetrated  by  any  government  on 
any  country,  and  it  is  no  wonder  that  it  produced  the  most  disastrous 
effects.  And  at  last  Sir  R.  Peel  and  the  ministers  were  compelled,  by 
sheer  necessity,  to  repeal  their  own  act,  and  do  that  whicli  had  been  the 
one  thing  needful  from  the  beginning,  viz.,  authorize  the  bank  directors 

*  "  Her  Majesty's  government  have  seen,  with  the  deepest  regret,  the  pressure 
which  has  existed  for  some  weeks  upon  the  commercial  interests  of  the  country,  and 
that  this  pressm-e  has  been  aggravated  by  a  want  of  that  confidence  which  is  neces- 
sary for  carrying  on  the  ordinary  dealings  of  trade.  They  have  been  in  hojjes  that 
the  check  given  to  transactions  of  a  sjieculative  character,  the  transfer  of  capital 
from  other  countries,  the  influx  of  bullion,  and  the  feeling  which  a  knowledge  of 
these  circumstances  might  have  been  expected  to  produce,  would  have  removed  the 
prevailing  distrust.  Their  hopes  have,  however,  been  disappointed,  and  her  Majes- 
ty's government  have  come  to  the  conclusion  that  the  time  has  arrived  when  they 
ought  to  attempt,  by  some  extraordinary  and  temporary  measure,  to  restore  confi- 
dence to  the  mercantile  and  manufacturing  community. 

"  For  this  purpose,  they  reconnnend  to  the  directors  of  the  Bank  of  England,  in 
the  present  emergency,  to  enlarge  the  amoimt  of  their  discount,  and  advance  upon 
approved  security ;  but  that,  in  order  to  restrain  this  operation  within  reasonable 
limits,  a  high  rate  of  interest  should  be  charged.  In  present  circumstances,  they 
would  suggest  that  the  rate  of  interest  should  not  be  less  than  8  per  cent.  If  this 
course  of  dealing  should  lead  to  any  infringement  of  the  existing  law,  her  Majesty's 


Suspension  of  the  Bank  Charter  Act.  383 

to  "  enlai'o-e  the  amount  of  their  discounts  and  advances  upon  approved 
security,"  beyond  the  amount  authorized  by  law.* 

Great  and  immediate  effect  of  this  Letter. — Never  was  a  step  taken  by 
government  attended  with  such  immediate  and  beneficial  effects  as  this. 
It  was  never  required  to  be  acted  upon ;  the  knowledge  that  it  had 
been  granted  was  of  itself  sufficient  to  dispel  the  panic.  The  statement 
which  the  chancellor  of  the  exchequer,  said  had  been  constantly  made  to 
him  for  a  few  days  before :  "Zei  us  have  notes  ;  charge  10  or  12  per  cent, 
upon  them  ;  we  do  not  care  what  the  rate  of  interest  is;  we  do  not  mean 
to  take  the  notes,  because  we  shall  not  want  them,  onli/  tell  us  that  we 
can  get  them,  and  that  ivill  at  once  restore  confidence.''''\  In  Mr.  Huskis- 
son's  words,  on  a  former  occasion,  "  the  stagnant  and  straitened  circula- 
tion of  the  country  wanted  life  and  aid,  and  became  every  day  more  em- 
barrassed, while  each  new  calamity  produced  by  such  a  state  of  things 
contributed  to  spread  and  increase  the  general  apprehension."  In  this 
disastrous  state  of  things,  the  knowledge  that  the  bank  charter  act,  which 
was  the  principal  cause  of  the  embarrassment,  had  been  set  aside,  acted 
at  once  as  a  charm  in  restoring  the  suspended  vitality  of  the  country. 


government  will  be  prepared  to  propose  to  Parliament,  on  its  meeting,  a  bill  of 
indemnity.  They  will  rely  upon  the  discretion  of  the  directors  to  reduce,  as  soon 
as  possible,  the  amount  of  their  notes,  if  any  extraordinary  issues  should  take  place 
within  the  limits  prescribed  by  law.  Her  Majesty's  government  are  not  insensible 
to  the  evil  of  any  departure  from  the  law  wliich  has  placed  the  currency  of  the 
country  upon  a  sound  basis ;  but  they  feel  confident  that,  in  the  present  circum- 
stances, the  measure  which  they  have  proposed  may  be  safely  adopted ;  and  that  at 
the  same  time  the  main  provisions  of  that  law,  and  the  vital  principle  of  maintain- 
ing the  conyertibility  of  the  Bank  of  England  note,  may  be  firmly  maintained." — 
AVe  are,  <fec.,  John  Russell,  Chaeles  Wood. — Tooke,  iv.  449,  450. 

*  Table  showing  the  whole  Bank's  and  Bankers'  N"otes  in  Circulation  in  the 
United  Kingdom,  from  Jl'ne,  1844,  to  December,  1851. 

England  and  Wales.  Scotland.  Ireland. 


Chartered 

Bank  of       Private    Joint-stock  Private  &  Bank  of  Private  &  Totalfor 

Mo's  ENDED,    England.     Banks.          Banks.      Joint-stock  Ireland.  Joint-stock     United 

Banks.  ^  Banks.    Kingdom. 

1&44,  June  22,  20,634,000  ..  4,743,057  ..  3,665,104  ..  3,117,988  ..  3,488,300  ..  2,080,277  ..  37,728,726 
"     Dec.     7.  20,986,000  ..  4,442,725  ..  3,086,670  ..  3,486,818  ..  3,900,275  ..  2,945,046  ..  38,847,540 

1845,  June  21,  21,277,000  ..  4,398,833  ..3,131,109  ..  3,485,531  ..  3,882,600  ..  2,736,432  ..  38,911,505 
"     Dec.     6,  22,015,000  ..  4,509,278  ..  3,221,888  ..  3,804,031  ..  4,404,975  ..  3,311,855  ..  41,327,022 

1846,  June  20,  20,553,000  . .  4,450,629  . .  3,128,185  . .  3,508,655  . .  4,119,850  . .  2,852,176  . .  38,618,495 
"     Dec.     5,  21,055,000  . .  4,596,549  . .  3,190,417  . .  3,996,861  . .  4,375,025  . .  3,464,505  . .  40,678,857 

1847,  June  19,  19,078,000  ..  4,385,608  ..  3,088,327  ..  3,647,314  ..  3,327,400  ..  2,137,551  ..  85,664,200 
"     Dec.     4,  20,161,000  ..  8,691,304  ..  2,576,686  ..  8,732,585  ..  3,175,400  ..  2,147,341  ..  35,484,310 

1848,  June  17, 18,683,000  ..  8,628,563  ..  2,598,625  ..  8,437,587  ..  2,863,800  ..  1,797,546  ..  33,009,121 
"     Dec.     2, 18,702,000  . .  3,703,728  . .  2,727,165  . .  3,570,126  ..  2,851,750  . .  2,117,300  . .  33,672,069 

1849,  June  10,  19,312,000  ..  8,540,417  ..  2,661,300  ..  3,380,902  ..  2,481,775  ..  1,564,700  ..  32,941,094 
"     Dec.    1,  19,244,000  ..  3,676,728  ..  2,703,093  ..  3,500,186  ..  2,656,225  ..  2,017,900  ..  33,798,138 

1850,  June  15,  20,401,000  . .  3,552,821  . .  2,745,227  . .  3,471,528  . .  2,530,125  . .  1,711,686  . .  84,412,387 
"     Dec.  2S,  19,757,000  . .  3,450,811  . .  2,685,543  . .  8,345,649  . .  2,647,600  . .  2,209,359  . .  84,095,962 

1851,  June  14  20,154,000  ..  3,513,765  ..  2,805,280  ..  3,474,171  ..  2,460,900  ..  1,808,018  ..  34,216,134 
"     Dec.  27, 19,899,000  . .  3,370,976  . .  2,678,391  . .  3,356,974  . .  2,470,225  . .  2,256,542  . .  34,032,108 

—Statistical  Abstract,  Xo.  IV.  1842-'56,  p.  34. 
f  Alison's  Europe,  vol.  viii. ;  Pari.  Deb.  xcv.  399, 


384  History  of  the  Bank  of  England. 

The  barrier  which  cut  off  the  bullion  ia  the  issue  department  from  the 
banking  department  having  been  removed,  the  pressure  and  apprehension 
which  had  existed  for  some  weeks,  owing  to  a  knowledge  of  the  smallness 
of  the  bank's  reserve,  and  of  the  bullion  available  for  banking  purposes, 
were  at  once  removed.  Eight  millions  of  bullion  being,  if  required,  let 
in  to  the  banking  department,  the  general  terror  was  at  an  end.  Hoards 
of  bank  notes  and  coin  which  had  been  secreted  during  the  panic  imme- 
diately came  forth ;  and  although  the  high  rate  of  interest  was  not  imme- 
diately reduced,  yet  merchants  in  good  credit  no  longer  found  any  diffi- 
culty in  getting  their  notes  discounted.  In  a  word,  the  crisis  was  at  an 
end,  and  the  directors  were  ere  long  able  to  reduce  the  rate  of  interest 
charged  at  the  bank,  till,  on  27th  January,  1848,  just  three  months  after 
Lord  John  Russell's  letter  was  written,  it  was  lowered  to  4  per  cent.* — 
a  decisive  proof  that  the  previous  high  rates  had  been  entirely  owing  to 
a  want  oi  currency  and  not  of  capital ;  for  unquestionably,  as  will  imme- 
diately appear,  during  the  intervening  period  the  available  wealth  of  the 
country,  so  far  from  increasing,  had  undergone  a  serious  diminution. f 

Meeting  of  Parliament,  and  Queen's  Speech,  Nov.  23. — As  a  matter 
of  course.  Parliament  was  called  together,  after  this  severe  crisis,  earlier 
than  usual,  both  to  deliberate  on  the  state  of  the  country,  and  to  inter- 
pose the  necessary  sanction  to  the  deviation  authorized  by  ministers  from 
the  bank  charter  act.  As  might  have  been  expected,  the  leading  topic 
in  the  queen's  speech,  and  in  the  debates  which  followed  upon  it,  were 
the  monetary  crisis,  and  the  working  of  that  act.  The  speech  said,  "  Her 
majesty  has  seen,  with  great  concern,  the  distress  which  has  for  some 
time  prevailed  among  the  commercial  classes.  The  embarrassments  of 
trade  were  at  one  period  aggravated  by  so  general  a  feeling  of  distrust 
and  of  alarm,  that  her  majesty,  for  the  purpose  of  restoring  confidence, 
authorized  her  ministers  to  recommend  to  the  directors  of  the  Bank  of 
England  a  course  of  proceeding  suited  to  such  an  emergency.  This 
course  might  have  led  to  an  infringement  of  the  law.  Her  majesty  has 
great  satisfaction  in  being  able  to  inform  you  that  the  law  has  not  been 
infringed,  that  the  alarm  has  subsided,  and  that  the  pressure  on  the 
banking  and  commercial  interests  has  been  mitigated.  The  abundant 
harvest  with  which  this  country  has  been  blessed  has  alleviated  the  evils 
which  always  accompany  a  want  of  employment  in  the  manufacturing 
districts.  Her  majesty,  however,  has  to  lament  the  recurrence  of  severe 
distress  in  Ireland,  owing  to  the  scarcity  of  the  usual  food  of  the  people. 
Her  majesty  trusts  that  this  distress  will  be  materially  relieved  by  the  ex- 
ertions which  have  been  made  to  carry  into  effect  the  law  of  last  session 
for  the  support  of  the  destitute  poor.  The  lord-lieutenant  has  employed 
with  vigor  and  energy  the  means  which  the  law  places  at  his  disposal  to 
detect  offenders,  and  prevent  the  repetition  of  offences.     But  she  feels  it 

*  The  rate  of  interest  charged  at  the  bank  was  reduced  as  follows : 

25th  October,  1847 8  per  cent.  I  27th  January,  1848 4  per  cent. 

22d  November,  1847, 7    "       "     |  15th  June,  1848, 3^  " 

2d  December,  1847, 6    "       "       2d  November,  1848, 3    "       " 

23d  December,  1847, 5    "       "     | 

— TooKE,  vol.  iv.  p.  330 ;  vol.  v.  p.  238. 

\  TooKE,  iv.  319,  330. 


Suspension  of  the  Bank  Charter  Act.  385 

her  duty  to  ask  the  assistance  of  Parliament  in  taking  further  precautions 
against  the  perpetration  of  crime  in  certain  counties  and  districts  of  Ire- 
land."* 

Sir  R.  Peel's  Statement  on  the  Bank  Charter  Act. — Foreseeing  that, 
in  the  agitated  state  of  the  commercial  classes  in  the  country,  it  would 
be  impossible  to  prevent  inquiry  into  the  working  of  the  bank  charter 
act,  ministers  wisely  resolved  to  take  the  matter  into  their  own  hands, 
and  thereby  secure  the  appointment  of  the  committee  of  inquiry  in  both 
houses.  A  long  and  important  debate,  which  was  continued  through 
three  nights,  took  place  on  the  motion  made  by  the  chancellor  of  the  ex- 
chequer for  the  appointment  of  a  committee,  but  as  the  topics  and  argu- 
ments were  the  same  as  those  of  which  an  abstract  has  already  been 
given  on  a  recent  occasion,  they  need  not  be  again  recapitulated  further 
than  to  notice  the  very  important  admission  of  Sir  R.  Peel  on  the  work- 
ing of  the  bank  charter  act.  The  right  honorable  baronet  said :  "  I  do 
not  deny  that  one  of  the  objects  contemplated  by  the  act  was  the  preven- 
tion of  the  convulsions  which  have  hitherto  occurred  in  consequence  of 
the  neglect  of  the  Bank  of  England  to  take  early  precautions  against  the 
withdrawal  of  its  treasure.  I  am  bound  to  say  that  in  that  hope  I  have 
been  disappointed.  Looking  to  recent  events,  the  depression  which  has 
since  prevailed,  and  the  numbers  of  houses  which  have  been  swept  away, 
I  am  bound  to  admit  that  that  purpose  of  the  bill  of  1844,  which  sought 
to  impose,  if  not  a  legal,  at  least  a  moral  obligation  upon  the  bank,  to 
prevent  the  necessity  of  extreme  measures  of  stringency  by  timely  precau- 
tions, has  not  been  fulfilled.  But  the  bill  of  1844  had  a  triple  object. 
Its  first  object  was  that  in  which  I  admit  it  has  failed,  namely,  to  pre- 
vent, by  early  and  gradual,  severe  and  sudden  contraction  of  the  cur- 
rency, and  the  panic  and  confusion  inseparable  from  it.  But  the  bill  had 
two  other  objects  of  at  least  equal  importance — the  one  to  maintain  and 
guarantee  the  convertibility  of  the  paper  currency  into  gold,  the  other  to 
prevent  the  difficulties  which  arise  at  all  times  from  undue  speculation 
being  aggravated  by  the  abuse  of  paper  credit  in  the  form  of  promissory 
notes.  In  these  two  objects  my  belief  is  that  the  bill  has  completely 
succeeded.  My  belief  is,  that  you  have  had  a  guarantee  for  the  main- 
tenance of  the  principle  of  convertibility,  such  as  you  never  had  before: 
and  that,  whatever  difficulties  you  are  now  suffering,  those  difficulties 
would  have  been  greatly  aggravated  if  you  had  not  wisely  taken  the  pre- 
caution of  checking  the  unlimited  issue  of  the  notes  of  the  Bank  of  Eng- 
land, of  joint-stock  banks,  and  of  private  banks. 

"  The  country  is  now  suffering  from  the  diminution  of  its  capital  and 
the  extent  of  its  speculations,  and  is  visiting  its  blame  on  the  very  meas- 
ure which  has  prevented  its  difficulties  being  ten  times  greater.  Every 
body  is  asking  for  money,  and  no  one  is  willing  to  lend  it,  and  parties 
talk  of  the  act  of  1844  being  the  cause  of  this  state  of  things,  the  real 
want  being  a  want  of  capital,  which  no  government  can  supply.  The  in- 
crease of  currency  is  not  a  multiplication  of  capital,  but  only  a  check  on 
the  industry  of  individuals.  At  all  times,  a  low  rate  of  interest  has  led 
to  exactly  the  same  results  of  increased  speculation  in  the  first  instance, 

*  Auson's  Europe,  vol.  viii. ;  Pari.  Deb.  xcv.  14  ;  Ann.  Reg.  1847,  188. 


386  History  of  the  Bank  of  England. 

and  of  great  embarrassment  in  the  next.  The  results  we  now  witness  are 
ascribed  by  the  gentlemen  opposite  to  free  trade  and  the  act  of  1844  ; 
but  the  history  of  the  last  sixty  years  proves  that,  in  peace  and  in  war, 
under  the  old  standard,  and  before  it  was  restored  in  the  time  of  an  in- 
convertible currency,  as  well  as  afterwards,  a  low  rate  of  interest  had  al- 
ways produced  the  same  melancholy  results.  It  was  so  in  the  panics  of 
1784,  1793,  1810,  1819,  1826,  1836,  1837.  If  you  repeal  the  act  of 
1844,  you  will  render  the  operations  of  the  bank  uncontrolled,  and  give 
back  to  joint-stock  and  private  banks  the  power  of  unlimited  issues. 
There  has  recently  been  undue  speculation,  a  great  issue  of  paper,  and  a 
discounting  and  re-discounting  of  bills,  quite  novel  in  the  history  of 
commerce.  This  country  and  the  United  States,  with  a  small  amount  of 
the  precious  metals,  possess  a  greater  amount  of  bank  notes  and  promisso- 
ry notes  than  any  country  in  the  world.  This  gives  great  facility  to  enter- 
prise, but  it  is  accompanied  by  great  corresponding  evils.  We  have  of  late 
been  carrying  on  a  system  of  commerce  far  beyond  our  capital,  and  the 
standard  ought  not  to  be  endangered  for  the  sake  of  bolstering  it  up.  In 
such  a  case,  it  is  unjust  to  charge  the  act  of  1844  as  having  been  the  cause 
of  the  deficiency  of  money,  when  men  ought  to  be  thankful  for  its  having 
prevented  the  aggravation  of  their  distress  by  checking  an  unlimited  issue 
of  paper. 

"The  present  pressure,  in  the  main  caused  by  undue  speculation,  has 
been  most  seriously  aggravated  by  the  expenditure  of  £33,000,000  in  the 
last  year,  in  the  purchase  of  food,  which  has  caused  a  greal  exportation  of 
gold,  and  by  the  application  of  an  enormous  capital  for  the  construction 
of  railways,  which,  though  not  in  the  end  a  dead  loss,  is,  for  the  present, 
at  least,  unaccompanied  by  profit.  In  these  causes  an  ample  explanation 
of  the  recent  embarrassment  is  to  be  found,  without  imputing  it  to  the 
act  of  1844.  I  cordially  approve  of  the  conduct  which  government 
adopted  with  regard  to  the  bank  on  occasion  of  the  crisis.  The  remedy 
for  the  existing  evils  was  to  be  found,  and  could  only  be  found,  in  the 
efforts  of  individuals,  and  in  the  contracting  of  engagements.  If  govern- 
ment had  relaxed  the  law  earlier,  the  exertions  of  individuals  would  have 
been  stopped,  and  new  engagements  would  have  been  entered  into. 
When,  however,  the  general  distrust  in  the  commercial  world  had 
reached  the  length  of  panic,  the  intervention  of  government  to  check  it 
was  justifiable  and  proper.  No  argument,  however,  can  be  drawn  from 
the  necessity  of  issuing  the  letter  of  25th  October  against  the  act  which 
it  suspended,  for  panic  is  one  of  those  cases  in  which  not  legislation,  but 
the  discretion  of  government,  must  be  applied."* 

Answer  of  Lord  G.  Bentinck  and  Mr.  Thomas  Baring. — On  the  other 
hand,  it  was  maintained  by  Lord  George  Bentinck  and  Mr.  Thomas 
Baring,  the  last  of  whom  had  at  first  been  a  supporter  of  the  act  of 
1844  :  "  The  strongest  condemnation  of  the  act  of  1844  is  to  be  found  in 
the  facts  that  it  had  not  prevented  the  crisis,  that  it  had  not  checked  it 
after  it  occurred,  and  that,  in  order  to  stop  it,  an  infringement  of  the  law 
had  become  absolutely  necessary.  So  far  from  having  checked  undue 
speculation,  and  so  prevented  the  crisis,  it,  had  done  just  the  reverse. 
. i . 

*  Alison's  Europe,  vol.  viii. ;  Pari.  Deb.xcv.  650,  674;  Ann.  Beg.  1847,  216,  219. 


Suspension  of  the  Bank  Charter  Act.  387 

The  theory  on  wliich  the  bill  was  founded  was,  that  the  bank  would  be 
constrained  to  lessen  its  issues  of  paper  as  the  gold  in  its  coffers  was  di- 
minished, and  that  speculation  would  be  checked  the  moment  it  became 
dangerous.  Has  the  result  corresponded  to  this  anticipation?  So  far 
from  it,  the  gold  in  the  coffers  of  the  bank,  on  12th  September,  1840,  was 
£16,354,000,  and  its  paper  in  circulation  was  then  £20,980,000.  On 
17th  April,  1847,  the  gold  was  reduced  to  £9,330,000,  and  the  circula- 
tion, so  far  from  being  diminished,  had  increased  to  £21,228,000;  that 
is,  by  £246,000  !  So  much  for  the  working  of  the  bill,  in  giving  a  timely 
check  to  undue  speculation.* 

"The  common  opinion  is,  that  if  there  is  an  over-issue  of  bank  notes, 
it  will  drive  the  gold  out  of  the  country.  That  was  the  fundamental  po- 
sition of  the  famous  bullion  report  in  1811,  and  it  has  been  the  basis  of 
all  our  subsequent  legislation  on  the  subject.  But  in  this  case  the  very 
reverse  took  place  ;  for  when  it  was  known  that  notes  would  be  freely 
issued,  hoards  of  gold  immediately  made  their  appearance,  and  the  stock 
of  bullion  in  the  bank  instantly  began  to  increase.  The  notes  came  out, 
and,  what  was  directly  contrary  to  the  theory,  the  gold  came  back  at  the 
same  time.  The  effect  of  the  infraction  of  the  law,  according  to  the 
chancellor  of  the  exchequer's  statement,  was  altogether  magical ;  the 
whole  panic  ceased ;  the  notes  came  out,  the  gold  came  in,  all  at  the 
same  time,  and  confidence  was  at  once  restored,  all  in  consequence  of  the 
announced  violation  of  the  bank  act.  Apparently,  that  is  an  act  honored 
more  in  the  breach  than  the  observance ;  but  what  is  to  be  said  in  de- 
fence of  an  act  which  never  proves  beneficial  till  it  is  repealed?  What  is 
to  be  said  as  to  the  scourge  of  8  per  cent,  inflicted  on  the  commercial 
community,  a  direct  tax  to  that  amount,  imposed  not  on  income,  but  on 
endangered  capital,  which  all  must  admit  sweeps  away  all  prospect,  while 
it  lasts,  of  commercial  profit,  and  is  confessedly  a  direct  consequence  of 
the  act  of  1844? 

"  We  are  told  that  it  is  the  famine  in  Ireland  which  has  caused  all  the 
distress,  and  it  is  doubtless  true  that  a  great  deal  of  gold  has  gone  out  of 
the  country  in  quest  of  provisions.  But  the  real  cause  of  it  all  is  the 
combination  of  free  trade  with  the  bank  charter  act.  It  is  not  the  high 
price  of  grain  which  has  occasioned  the  difficulty.  During  the  last  seven 
years  of  the  war  the  average  of  wheat  was  94s.  6d.,  and  yet  we  were  able 
to  raise  £70,000,000  yearly  in  taxes,  and  borrowed  £180,000,000,  which 
was  at  the  rate  of  £26,000,000  a  year." 

Immense  effects  of  the  Monetary  Crisis  of  1847. — Such  was  the  terrible 
monetary  crisis  of  1847  in  Great  Britain,  the  most  disastrous  and  wide- 
spread of  which  there  is  any  record  in  the  annals  of  mankind.  Its  effects, 
not  merely  in  the  British  empire,  but  in  both  hemispheres,  have  been  in 
the  highest  degree  important,  and  in  no  instance  has  the  agency  of  su- 
preme wisdom  in  educing  lasting  good  out  of  transitory  evil  been  more 
conspicuous.  Beyond  all  question,  it  was  mainly  instrumental  in  bring- 
ing to  a  crisis  the  general  discontent  in  France,  and  overturning  the  cor- 
rupt government  of  Louis  Philippe  ;  the  suspension  of  credit,  want  of 
employment,  and  stagnation  of  industry  among  the  workmen  of  Paris, 

*  Alison's  ^wrope,  vol.  viii. ;  Farl.  Deb.  xc.  615. 


388  History  of  the  Bank  of  England. 

which  proved  fatal  to  the  Orleans  dynasty,  had  its  origin  in  the  hank 
charter  act  of  London.  It  perpetuated  through  a  course  of  years  the 
misery  first  induced  by  the  famine  in  Ireland,  and  gave  rise  to  the  pro- 
digious and  long-continued  exodus  of  the  Irish  people,  which  has  ended  in 
transferring  two  millions  of  Celts  from  the  shores  of  the  Emerald  Isle  to 
the  transatlantic  wilds.  It  has  given  comparative  security  and  unanimity 
to  the  British  empire,  by  extracting  the  thorn  which  had  so  long  festered 
in  its  side,  implanted  by  Irish  suffering  and  envenomed  by  sacerdotal 
ambition.  It  has  led  to  the  overthrow  of  the  monarchies  of  Austria  and 
Prussia,  and,  by  bringing  down  the  reserve  of  legitimacy  in  the  shape  of 
the  Russian  battalions  to  the  Hungarian  plains,  it  subverted  for  a  time 
the  balance  of  power  in  Europe,  impelled  Nicholas  into  the  career  of 
Oriental  ambition,  and  ultimately  arrayed  the  forces  of  the  West  against 
those  of  the  East  on  the  shores  of  the  Crimea.  Finally,  it  produced  in 
the  far  west  and  southeast  effects  still  more  lasting  and  important ;  for,  by 
the  money  pressure  it  produced  in  America,  it  forced  the  United  States 
into  foreign  aggression  as  the  means  of  paying  their  domestic  debts, 
transferred  California  from  the  lazy  hands  of  the  Spaniards,  by  whom  its 
treasures  had  lain  undiscovered  for  three  hundred  years,  into  the  active 
grasp  of  the  Anglo-Saxons ;  revealed  to  British  enterprise,  sent  into  exile 
by  domestic  sufiering,  the  hidden  treasures  of  Australia;  and  gave  a  per- 
manent and  beneficial  impulse  to  the  industry  of  the  whole  world,  by  pro- 
viding a  currency  adequate  to  its  increasing  numbers  and  transactions 
in  the  treasures  it  brought  to  light  in  both  hemispheres. 

Lesson  winch  it  taught  the  British  people. — If  the  ultimate  effects  of 
this  great  convulsion  have  been  thus  widespread  and  momentous,  not  less 
important  is  the  lesson  it  has  taught  the  British  people  as  to  the  results 
of  the  new  system  on  which  they  had  adventured,  and  which,  in  the  very 
outset,  had  produced  such  astonishing  consequences.  The  years  1847 
and  1848  are  peculiarly  worthy  of  attention  to  the  student  of  British 
history,  for  they  brought  to  light  the  dreadful  perils  of  the  combination 
of  free  trade  with  a  fettered  currency  in  aggravating  distress,  as  the  years 
1845  and  1846  had  demonstrated  the  dangers  of  the  monetary  system  in 
inflaming  speculation.  It  is  doubtful  which  is  in  the  end  the  most  peril- 
ous, or  impels  a  nation  most  certainly  to  the  brink  of  ruin.  The  mode 
in  which  these  double  consecutive  results  have  taken  place  is  now  per- 
fectly apparent,  and  they  both  flow  from  one  cause,  viz.,  the  establishment 
of  a  currency  based  entirely  upon  the  retention  of  gold,  coupled  with  a 
commercial  system  which  rendered  that  retention  impossible.  This  was 
the  root  of  the  evil ;  the  Irish  famine  was  an  accidental  circumstance, 
which  brought  the  danger  earlier  to  light,  and  in  a  more  fearful  form  than 
would  otherwise  have  occurred,  but  was  by  no  means  instrumental  in 
producing  it. 

The  Monetary  Crisis  was  oiving  to  Free  Trade  and  a  Fettered  Curren- 
cy.— That  a  failure  to  the  extent  of  nearly  a  half  in  the  staple  food  of  a 
people  numbering  eight  millions  must  of  itself  produce  a  frightful  amount 
of  suffering  among  the  classes  affected  by  it,  is  sufficiently  apparent ;  and 
Sir  R.  Peel's  monetary  system  is  nowise  chargeable  with  that  distress. 
But  it  is  chargeable,  and  exclusively  so,  with  the  communication  of  the 
distress  from   the  Irish  peasantry  to   the   commercial  classes  of  Great 


Suspension  of  the  Bank  Charter  Act.  389 

Britain,  and  the  general  collapse  of  credib  which  terminated  in  the  sus- 
pension of  the  bank  charter  act  in  October,  1847.  There  is  a  very 
obvious  connection  between  the  failure  of  a  staple  kind  of  food  and  the 
distress,  or  even  famine,  of  the  people  who  live  on  it ;  but  there  is  no 
natural  connection  between  such  failure  and  a  monetary  crisis  in  a  neigh- 
boring country,  accompanied  with  general  ruin  to  the  trading  classes,  and 
commercial  embarrassment  and  bankruptcy  for  a  course  of  years.  The 
agricultural  produce  destroyed  by  the  potato-rot  in  Ireland  was  said  to 
be  worth  £16,000,000 — call  it  £20,000,000  in  the  whole  empire,  which 
is  probably  above  the  mark.  That  is  only  a  fifteenth  part  of  the  entire 
agricultural  produce  of  the  empire,  estimated  at  that  period  at 
£300,000,000 — a  much  less  deficiency,  upon  the  whole,  than  an  ordinary 
bad  harvest  produces,  attended  with  no  extraordinary  results.  "What- 
ever severity  of  local  distress,  therefore,  such  a  deficiency  might  produce, 
it  cannot  be  considered  as  having  been,  if  it  had  stood  alone,  the  cause 
of  the  dreadful  commercial  sufl'ering  in  Great  Britain.  On  the  contrary, 
by  raising  the  prices  of  subsistence,  and  stimulating  commerce,  it  should 
rather  have  tended  to  augment  mercantile  profits,  and  enhance  mercantile 
enterprise  in  the  neighboring  island.  But  the  moment  a  monetary  sys- 
tem is  established,  on  a  basis  which  renders  the  currency  and  advances 
by  bankers  exclusively  dependent  on  the  gold  in  the  bank's  coffers,  any 
adventitious  circumstance  which  occasions  an  unusual  drain  upon  those 
coffers,  which  a  great  importation  of  food  invariably  does,  produces  a 
contraction  of  advances,  a  rise  of  interest,  a  destruction  of  credit,  from 
which  it  requires  a  long  course  of  years  for  any  nation,  even  the  most 
prosperous,  to  recover. 

Dangers  of  Free  Trade  and  a  Fettered  Currency. — But  this  is  not 
all.  The  combination  of  free  trade  with  a  gold-dependent  currency, 
not  only  necessarily  renders  any  adventitious  cause  which  occasions 
a  great  export  of  gold  the  forerunner  of  commercial  embarrassment 
and  ruin,  but  it  perpetually  keeps  the  nation  on  the  verge  of  such  a 
catastrophe.  It  augments  fearfully  the  chance  of  its  occurrence,  more 
especially  in  an  old,  opulent  and  luxurious  State.  As  such  a  community 
can  bring  into  the  market  the  fruits  of  the  accumulated  industry  of  seve- 
ral centuries,  while  the  poor  States  from  which  it  purchases  subsistence 
can  only  bring  the  fruits  of  two  or  three  years,  the  means  of  consumption 
of  the  one  infinitely  exceed  those  of  the  other.  Thence  the  trade  between 
them  necessarily  runs  into  a  huge  excess  of  imports  over  exports,  the 
balance  of  which,  of  course,  must  be  paid  in  cash.  This,  accordingly, 
has  taken  place  in  the  most  remarkable  manner  in  the  trade  of  Great 
Britain  with  all  the  nations  from  whence  she  imports  largely  rude  pro- 
duce, and  which  has  terminated  in  a  settled  balance  of  imports  over  ex- 
ports of  from  £30,000,000  to  £40,000,000  a  year.* 

*  Alison's  Europe,  vol.  viii. 


390  History  of  the  Bank  of  England. 


CHAPTER  IV. 

The  Years  1848,  1849,  1850,  1851. 

THE  YEAR  1848 RATE  OF  INTEREST  EIGHT    PER  CENT. REVOLUTION    IV  FRANCE CONSOLS 

DOWN  TO    83 SUSPENSION    OF  THE    BANK    OF    FRANCE — 'IfAILURES    IN  FRANCE CHARTIST 

MOVEMENT EXTRAORDINARY  DECLINE  IN  RAILWAY  SECURITIES— UNSATISFACTORY  RESULTS 

OF    THE    YEAR ATTEMPTS    TO    AMEND    THE   BANK    CHARTER SPEECH    OF    SIR    R.    PEEL 

EXAMINATION  OF  THE  GOVERNOR  AND  DIRECTORY    OF    THE    BANK PRICES    OF    STAPLES 

YEAR  1849 ELECTION    OF    PRESIDENT    IN    FRANCE IMPROVED    PROSPECTS YEAR  1850 

^LOW    RATE    OF    DISCOUNT — NEW  LOANS    TO    RUSSIA    AND    DENMARK — THE    SCOTCH   EX- 
CHANGE   BANKS — EXTRAORDINARY    ADVANCE    IN  COTTON CALIFORNIA    GOLD  ARRIVALS 

IMPROVEMENT  IN  RAILWAY  SHARES YEAR  1851 SHORT  HARVEST FAILURES  IN  U.  S. 

NEW  LOAN  TO  SARDINIA DISCOVERIES  OF  GOLD  IN  AUSTRALIA EXTRAORDINARY  COINAGE 

TS  FRANCE  AND  ENGLAND. 

The  Year  1848. 

The  year  1848  opened  under  circumstances  which,  by  contrast  with 
those  of  the  preceding  year,  might  be  called  favorable.  The  minimum 
rate  of  discount  at  the  Bank  of  England,  which  had  been  fixed  at  eight 
per  cent,  per  annum  by  the  government  letter  of  the  25th  October,  1847, 
had  been  successively  reduced  to  seven  per  cent,  on  22d  November ;  to 
six  per  cent,  on  the  2d  of  December;  to  five  per  cent,  on  the  23d  of 
December,  and  to  four  per  cent,  on  the  2 ^th  January,  1848.  The  amount 
of  the  banking  reserve  had  risen  from  a  point  under  three  millions  in 
October,  1847,  to  nearly  seven  millions  in  January,  1848,  and  the  mar- 
ket rate  of  discount  had  fallen  even  more  rapidly  than  the  bank  rate. 
But  the  occurrence  of  the  revolution  in  France,  at  the  close  of  Feb- 
ruary, 1848,  the  utter  overthrow  of  M.  Guizot,  the  flight  of  Louis 
Philippe,  and  the  installation  in  power  of  an  extreme  republican  party, 
were  events  which  had  entered  into  no  one's  view  of  the  immediate 
future.* 

Consols  had  ranged,  prior  to  the  24th  February,  1848,  about  88-90.  The 
eff'ect  of  the  French  news  will  be  seen  from  the  following  extracts  from 
the  city  article  of  the  Economist  of  Friday,  the  3d  March,  1848  : 

"  The  fluctuations  in  the  public  securities  have  been  more  sudden  and 
greater  during  February  than  at  any  time  since  the  termination  of  the 
continental  war.  On  Friday,  26th  February,  consols  closed,  even  with  a 
knowledge  of  the  abdication  of  Lons  Philippe,  at  88|^.  On  Saturday, 
however,  they  opened  at  84|-  to  85,  and  suddenly  fell  to  83,  when  it  was 
found  that  a  provisional  government  had  been  formed  instead  of  a 
regency." 

*Tooke'8  History  of  Prices,  vol.  v.  pp.  230,  231. 


Events  of  the  Year  1848.  391 

In  the  course  of  March  occurred  the  suspension  of  specie  payments  by 
the  Bank  of  France,  and  at  Brussels  by  the  Bank  of  Belgium  and  the 
Societe  Generale ;  and  indications  were  given  of  the  violent  policy- 
espoused  by  Ledru  Rollin  and  the  party  of  the  Red  Republic  in  France. 

During  March,  April  and  May,  the  failures  of  banking  and  mercantile 
houses  at  Paris,  Havre,  Marseilles,  Hamburgh,  Amsterdam,  Antwerp, 
Berlin,  and  other  large  continental  cities,  were  so  numerous,  that  in  some 
places  the  discredit  amounted  to  a  literal  suspension  of  all  business,  and 
of  the  payment  of  any  obligations  in  specie. 

Political  apprehension  was  added  to  commercial  disaster.  In  this 
country  the  Chartist  failure  of  the  10th  of  April  removed  all  fear  of  any 
outbreak,  but  abroad  the  flame  of  revolt  rapidly  overran  all  Germany  and 
most  of  Italy. 

As  the  year  advanced,  the  distress  and  pressure  arising  from  the  rapid 
decline  of  railway  dividends — the  utter  depreciation  in  the  market  of  all 
railway  shares  and  securities — the  constant  strain  of  heavy  calls  upon 
shareholders  already  exhausted,  and  the  universal  distrust  and  despond- 
ency regarding  the  future  of  railway  property,  became  the  prominent 
topic,  and  excited  real  alarm.* 

The  commercial  state  of  France  at  this  period,  and  the  circumstances 
which  rendered  the  important  change  in  its  monetary  system  which  soon 
after  took  place  necessary,  are  thus  explained  in  the  otficial  report  of  the 
Comte  Argout,  the  bank's  chairman,  for  the  year  1848:  "When  the 
revolution  of  February  broke  out,  the  treasure  in  the  Bank  of  France  and 
its  branch  establishments  amounted  to  225,000,000  francs.  The  demand 
for  specie,  however,  rapidly  increased  on  that  event,  but  the  bank  made 
the  most  courageous  efforts  to  meet  the  drain.  From  the  26th  February 
to  the  15th  March,  that  is,  during  fifteen  working  days,  the  bank  dis- 
counted in  Paris  alone  112,000,000  francs.  In  the  branch  banks,  during 
the  same  period,  it  discounted  45,000,000  francs.  By  this  means  it  saved 
from  bankruptcy  the  banks  of  Rouen,  Orleans,  Havre  and  Lille.  But  the 
drain  of  specie  was  only  thereby  rendered  more  alarming.  From  the 
26th  February  to  the  15th  March,  the  metallic  reserve  at  Paris  fell  from 
131,000,000  to  82,000,000  francs.  On  the  15th  March  the  payments  in 
coin  amounted  to  10,000,000  francs,  and  on  the  evening  of  that  day 
there  remained  only  59,000,000  francs.  On  the  succeeding  day  (16th) 
it  was  known  the  run  would  be  still  more  considerable,  and  in  a  few  days 
more  the  bank  would  be  entirely  drained  of  specie." 

Suspension  of  Cask  Payments. — In  these  alarming  circumstances,  the 
council-general  of  the  bank  met  and  prepared  the  draft  of  a  decree,  which 
was  immediately  submitted  to  the  provisional  government,  received  its 
unanimous  sanction  on  the  night  of  the  15tli  March,  and  appeared  in  the 
columns  of  the  Moniteur  on  the  following  day.  By  this  decree  the  bank 
was  relieved  from  the  obligation  of  paying  its  notes  in  specie,  and  its 
notes  were  declared  a  legal  tender.  The  power  of  emission,  however, 
was  limited  to  350,000,000  francs  as  the  maximum  of  the  circulation; 
and  it  was  provided  that  weekly  states  of  the  affairs  of  the  bank  should 


*  Tooke's  History  of  Prices,  vol.  v.  pp.  231,  232, 


392  History  of  the  Bank  of  England. 

be  published,  as  in  England.  The  emission  of  notes  for  100  francs  was 
authorized  by  the  same  decree.  The  issue  of  notes  for  50  francs  and  25 
francs  had  been  anxiously  prayed  for  by  the  commercial  classes  ;  but  the 
council-general  of  the  bank  refused  its  consent  to  this  demand,  as  likely 
to  lead  to  an  exportation  of  specie  at  a  time  when  it  was  of  such  import- 
ance to  keep  it  in  the  country.  The  circulation  of  the  bank  at  the  date 
of  the  decree  amounted  to  275,000,000  ;  so  that,  even  as  it  stood,  this 
measure  afforded  a  considerable  extension  to  the  available  circulation  of 
the  country,  and  what  was  of  still  more  importance,  relieved  it  entirely 
of  the  obligation  to  pay  in  specie.* 

Great  effects  of  this  change,  and  its  wisdom, — Thus  did  the  suspension 
of  cash  payments  result  in  France  from  the  revolution  of  1848,  as  the 
emission  of  assignats  in  that  country  in  1791,  and  the  suspension  of  cash 
payments  in  Great  Britain  in  1797,  had  arisen  from  that  of  1  789.  In  all 
the  three  cases  the  change  was  the  result  of  necessity,  and  the  effect  was 
immense,  far  exceeding  what  had  been  either  intended  or  foreseen  by  its 
authors.  The  forced  paper  circulation  of  the  first  revolution  in  France, 
which  at  length  was  pushed  to  £750,000,000  sterling,  beyond  all  ques- 
tion brought  that  country  safe  through  the  terrible  assault  of  the  European 
powers  in  1793  and  1794;  but  it  did  so  only  by  producing  a  rise  of 
prices  which  utterly  destroyed  the  capital  of  the  nation,  and  inflicted  an 
irreparable  wound  on  its  industry.  The  suspension  of  cash  payments  in 
Great  Britain  in  1797  alone  enabled  the  nation  to  make  head  against  the 
power  of  revolutionary  France,  and  preserved  the  liberties  of  Europe 
when  threatened  with  destruction  by  the  arms  of  Napoleon  ;  but  it  did 
this  at  the  cost  of  a  duplication  of  prices,  doubling  the  amount  of  the 
national  debt,  and  imposing  a  heavy  burden  on  its  industry,  which  will 
never  now  be  removed.  The  opposite  system,  introduced  by  Sir  Robert 
Peel  in  1819,  of  rendering  the  currency  entirely  dependent  on  gold,  and 
contracting  the  paper  whenever  the  gold  was  withdrawn,  has  induced 
three  terrible  monetary  crises,  under  the  effects  of  the  last  of  which  the 
nation  was  still  laboring.  Steering  the  middle  course  between  these  two 
extremes,  the  measure  of  M.  Garnier  Pages,  based  on  the  principle  of 
meeting  the  drain  by  an  issue  of  pajoer,  bearing  a  forced  circulation,  but 
limited  in  amount  to  what  the  nation  really  required,  may  be  regarded  as 
a  model  of  political  wisdom,  and  perhaps  the  greatest  boon  ever  bestowed 
by  legislative  wisdom  on  an  afflicted  nation.  For  if  it  had  not  been 
passed,  and  either  an  unlimited  issue  of  the  currency,  or  an  unlimited 
contraction  of  it,  had  been  practiced,  beyond  all  doubt  all  the  eloquence 
and  courage  of  Lamartine  would  have  been  unable  to  avert  another  revo- 
lution— a  second  rule  of  the  Jacobins,  a  second  reign  of  blood,  and  a 
second  revolutionary  war.f 

This  decree  was,  in  the  first  instance,  confined  to  the  Bank  of  France ; 
but  by  two  supplementary  decrees,  issued  on  the  27th  April  and  2d 
May,  the  protection  was  extended  to  the  banks  of  Bordeaux,  Rouen, 
Nantes,  Lyons,  Marseilles,  Havre,  Lille  and  Orleans,  which  were  amal- 


*  Decree  of  March  15,  1848;  Moniteur,  March  16. 
f  Alison's  Europe,  vol.  viii.  p.  327. 


Events  of  the  Year  1848.  393 

gamated  with  the  Bank  of  France,  and  their  joint  circulation,  inconverti- 
ble into  specie,  was  extended  to  452,000,000  francs,  (£18,000,000.) 
This  was  fully  equal  to  the  necessities  of  a  nation  which  at  that  period, 
strange  to  say,  did  not  require  more  than  £18,000,000  of  discounts,  while 
Great  Britain  needed  £130,000,0001  At  the  same  time  the  greatest 
efforts  were  made  by  the  Bank  of  France,  and  all  its  branches,  to  sustain 
industry  and  credit  in  every  possible  way.  Discount  banks  [Comj)toirs 
Nationaux)  and  loan  offices  [Magasins  Generaux)  were  established  in 
Paris  and  all  the  commercial  towns  of  France,  and  bills  were  accepted 
for  discount  bearing  two  signatures  only,  instead  of  three,  as  formerly  re- 
quired. The  re-discounting  of  bills  was  permitted,  contrary  to  prior 
usage,  and  loan  offices  formed  for  granting  receipts  or  warrants  for  goods 
stored  in  public  warehouses,  on  which  loans  of  money  might  be  obtained. 
By  these  several  means,  powerfully  aided  by  the  limited  but  inconverti- 
ble currency,  very  great  assistance  was  rendered  by  the  Bank  of  France, 
both  to  individuals  and  the  public  treasury,  during  the  remainder  of  the 
year — a  period  which,  but  for  that  relief,  would  unquestionably  have 
been  fraught  with  unparalleled  disasters.  In  the  nine  months  of  1848 
after  the  decree  suspending  cash  payments,  the  bank  at  Paris  rediscount- 
ed  bills  to  the  amount  of  90,000,000  francs,  and  in  the  branches 
140,000,000  francs,  besides  advancing  on  security  of  goods  in  the  "  Mag- 
asins"  62,500,000  more.  In  addition  to  these  advances  to  individuals, 
the  bank  lent  government,  on  3 1st  March,  50,000,000  francs;  on  31st  May, 
30,000,000  francs;  and  on  3d  June  engaged  for  a  loan  of  150,000,000 
francs  to  the  treasury,  of  which  50,000,000  francs  was  actually  paid  over. 
In  these  immense  advances,  rendered  possible  solely  by  the  wise  suspen- 
sion of  cash  payments,  rather  than  all  the  eloquence  of  M.  Lamartine, 
the  real  means  are  to  be  found  whereby  France  surmounted  the  crisis, 
and  averted  a  second  reign  of  terror.  And  the  fruit  of  these  measures 
clearly  appeared  in  the  rapid  diminution  of  the  number  weekly  admitted 
into  the  Ateliers  Nationaux,  which,  in  the  fortnight  from  16th  to  31st 
March,  was  25,250;  and  from  1st  to  15th  April,  36,250;  but  from  16th 
to  31st  May  it  had  fallen  to  3,000 ;  and  from  1st  to  15th  June,  to  1,200. 
Deplorable  State  of  the  Public  finances. — Most  fortunate  was  it  for 
France  and  the  world  that  the  provisional  government  had  either  the  sense 
to  see,  or  were  forced  by  the  pressure  of  the  working  classes  to  adopt,  these 
the  only  measures  suited  to  the  crisis,  or  capable  of  meeting  its  dangers ; 
for  the  condition  of  the  public  finances,  in  consequence  of  the  revolution, 
had  become  all  but  desperate.  Such  was  the  effect  of  the  universal  alarm, 
that  the  consumption  of  every  individual  in  thre  country,  from  the  high- 
est to  the  lowest,  was  at  once  reduced  to  the  smallest  possible  amount. 
The  octroi,  of  the  capital,  which,  in  1847,  had  produced  from  75,000  to 
80,000  francs  a  day,  immediately  fell  to  40,000  or  50,000  francs.  All 
other  taxes  on  consumption  at  once  fell  off  in  the  same  proportion.  The 
imports  of  France  in  1848  were  little  more  than  half  of  what  they  had 
been  in  1847  ;  and  as  the  revolution  only  took  place  in  the  end  February, 
this  implied  a  falling  off  to  a  still  greater  amount  in  the  ten  months  sub- 
sequent to  that  convulsion.  The  exports,  it  is  true,  did  not  exhibit  a 
decline  by  any  means  in  the  same  proportion  ;  but  that  arose  from  a 
peculiar  and  very  distressing  cause,  which,  so  far  from  bespeaking  a  re- 


394  History  of  the  Bank  of  England. 

viva!  of  industry,  indicated  just  the  reverse.  It  arose  from  tlie  universal 
desire  to  turn  movable  property  into  cash,  and  the  impossibility  of  find- 
ing a  market  for  it  in  France  itself.  This  led  to  a  general  sending  of  it 
abroad  ;  and  to  such  a  length  did  this  go,  that  the  foreign  trade  of  France, 
in  1848,  presented  the  enormous  balance  of  £11,000,000  in  favor  of  that 
country,  which,  of  course,  was  paid  in  specie.  This  is  a  most  curious  and  in- 
structive circumstance,  indicating  at  once  how  fallacious  a  test  of  the  pros- 
perity of  a  nation  the  amount  of  treasure  in  its  banking  establishments  is  ; 
how  erroneous  an  opinion  it  is,  which  is  often  entertained,  that  the  amount 
of  exports  is  to  be  taken  as  the  measure  of  its  manufacturing  prosperity ; 
and  how  great  a  mistake  it  is  to  suppose  that  the  issue  of  inconvertible 
paper  in  moderate  quantities  will  drive  specie  out  of  the  country.  For 
in  this  year  of  unexampled  alarm  and  suffering,  when  the  diminished  con- 
sumption of  all  classes  brought  the  imports  down  a  half,  and  the  national 
industry  was  sustained  only  by  the  issue  of  inconvertible  notes  to  the 
extent  of  £18,000,000  sterling,  the  balance  of  trade  was  £11,000,000  in 
favor  of  France.  Iler  exports  had  undergone  very  little  diminution  ;  the 
notes  in  circulation  had  risen  from  £11,000,000  to  £15,000,000,  the  bul- 
lion in  the  bank  from  £3,000,000  to  £10,000,000,  while  the  discounts  had 
sunk  from  £11,000,000  to  £6,000,000.^^ 

Two  hundred  millions  sterling  had  been  actually  called  up  on  railway 
shares  in  the  United  Kingdom,  and  expended  ;  that  the  holders  of  this 
two  hundred  millions  had  given  for  the  property  at  least  two  hundred  and 
fifty  millions  ;  that  in  October,  1848,  the  market  value  of  the  two  hundred 
and  fifty  millions  was  certainly  not  more  than  one  hundred  and  fifty  mil- 
lions sterling ;  and  hence,  that  a  loss  of  at  least  one  hundred  millions  had 
been  thus  sustained,  with  the  certain  prospect  of  further  expenditure,  and, 
therefore,  of  further  sacrifice  still  unprovided  for.  The  following  extract 
is  from  an  elaborate  paper  in  the  Economist  of  21st  October,  1848.f 

"  The  chief  primary  cause  which  has  been  in  operation  during  the  last 
twelve  months  (say  since  October,  1847)  in  reducing  prices  of  railway 
shares,  arose  from  the  simple  fact  that  the  public  had  undertaken  to 
make  railways  far  beyond  their  means  to  accomplish.  Every  fresh  call 
that  has  been  made  upon  exhausted  shareholders  was  attended  by  one  of 
two  eff'ects — either  the  shares  themselves,  upon  which  the  call  was  made, 
were  sold,  in  order  to  avoid  payment,  or  some  other  shares  were  sold  in 
order  to  raise  money  for  the  purpose.  But,  W'hichever  plan  was  adopted, 
there  was  a  constantly  increasing  number  of  sellers,  and  a  constantly  di- 
minishing number  of  buyers." 

Magnitude  and  Perfection  of  the  Raihoay  System  in  Britain. — The 
railway  system,  which,  during  these  calamitous  years,  and  under  all  the 
difficulties  arising  from  a  restricted  currency  and  monetary  crisis,  was 
carried  on  and  completed  in  Great  Britain,  was  of  the  most  perfect  and 
magnificent  description,  and  deservedly  places  this  country  at  the  head 
or  all  similar  undertakings  in  any  part  of  the  world.  A  comparison  of 
the  railways  in  Great  Britain  with  those  in  France,  Germany,  Belgium  or 
America,  in  the  end  of  1854,  proves  that,  in  proportion  to  the  area  of  the 

*  Alison's  Europe,  vol.  viii.  p.  328  ;  Newmrash,  vi.  58,  59. 
•|-  Tooke's  History  of  Prices,  vol.  v.  p.  234. 


Events  of  the  Year  1848.  395 

country,  the  system  is  more  complete  than  in  any  other,  taken  as  a  whole, 
and  exceeded  only  by  those  of  Massachusetts,  in  America,  in  a  part  of  a 
country.  Even  in  Scotland  the  progress  of  these  undertakings  Las  been 
nearly  twice  as  rapid  as  in  Germany ;  and  if  allowance  is  made  for  the 
extent  of  mountain  surface,  where  they  are  impossible,  it  enjoys  a  more 
complete  system  than  either  Belgium,  the  garden  of  continental  Europe, 
or  the  western  States  of  America,  where  they  are  constructed  at  the  least 
expense,  and  with  the  greatest  facility.* 

The  Bank  of  England  had  reduced  the  minimum  rate  of  discount  from 
four  per  cent,  to  three  and  a  half  per  cent,  on  the  15th  June,  1848  ;  and 
to  three  per  cent,  on  the  2d  November.  At  the  latter  date,  the  total 
bullion  stood  at  fourteen  millions,  and  the  private  securities  at  ten  and  a 
half  millions.  The  market  rate  of  discount  was  two  and  a  half  to  three 
per  cent.f 

Comparing  the  two  months — October  and  December,  1848 — described 
in  the  extract  just  given,  as  the  periods  between  which  prices  had  risen 
ten  per  cent.,  we  find  as  follows  : 

Circulation  of  Oct.,  1848.  Dec,  1848. 

Bank  of  England, £19,600,000         £17,900,000 

Country  banks,  (Great  Britain,)  . .       10,000,000         9,400,000 


£  29,600,000         £  27,300,000 

That  is  to  say,  the  outstanding  circulation  has  fallen  two  and  one-third 
millions,  concurrently,  with  a  considerable  rise  of  prices ;  and  also  con- 
currently, with  a  stationary  amount  of  private  securities  and  total  bullion 
at  the  Bank  of  England. 

This  partial  recovery  at  the  end  of  the  year  somewhat  relieved  the 
gloom  of  the  period  ;  but  the  annual  trade  circulars,  issued  at  the  close 
of  1848,  described  the  results  of  the  twelvemonth  as  exceedingly  unsatis- 
factory. There  had  been  a  general  decline  of  prices,  arising  from  limita- 
tions of  consumption. 

But  Sir  Robert  Peel,  in  the  debate  alluded  to,  1848,  expressed  him- 
self with  great  vehemence  against  the  idea  of  any  relaxation  at  all.  "  The 
suggestion,"  he  said,  "  of  giving  a  discretionary  power  to  the  bank  to  re- 
lax the  restrictions  which  are  imposed  upon  the  bank,  /  consider  most 
objectionable.  I  consider  it  to  be  at  variance  with  experience  and  with 
reason  ;  with  the  evidence  of  the  witnesses  most  competent  to  give  an 
opinion  upon  the  question  at  issue.  Why,  in  1844,  did  you  impose  re- 
strictiu'ns  on  the  bank  ?  Because  the  experience  of  preceding  years  ; 
full  knowledge  of  the  course  pursued  by  the  bank  when  the  bank  had 
unlimited  authority  ;  a  deep  sense  of  the  evils  which  had  arisen  from  the 
uncontrolled  power  of  the  bank  in  1825,  1837  and  1839;  convinced 
Parliament  of  the  necessity  of  subjecting  the  bank  to  peremptory  restric- 
tions. There  was,  in  1844,  an  almost  unanimous  impression,  without 
which  the  act  of  that  year  could  not  have  been  passed,  that  the  discre- 
tionary power  of  the  bank  had  been  improvidently  exercised,  and  ought 
to  be  controlled  by  law." 

*  Alison's  Europe,  vol.  viii. 

f  Tooke's  History  of  Prices,  vol.  v.  p.  234. 


396  History  of  the  Bank  of  England. 

The  governors  and  directors  of  the  bank,  who  were  examined  by  the 
committee  on  this  point,  gave  opinions  equally  decided  against  any  relax- 
ing clause.  This,  however,  was  a  matter  of  course,  seeing  that  they  were 
uncompromising  defenders  of  the  act  of  1844.  Their  views  were,  conse- 
quently, identical  with  those  of  Sir  Robert  Peel,  who  quoted  them  as 
•witnesses  in  favor  of  the  measure. 

Year  1849. 

The  year  1849  opened  under  somewhat  hopeful  circumstances. 

A  belief  was  entertained  that  by  the  election  of  Louis  Napoleon  to  the 
French  presidency,  (20th  December,  1848,)  the  condition  of  France 
would  become  speedily  settled,  and  it  was  not  apprehended  that  any  great 
peril  was  connected  with  the  internal  disputes  of  other  States  of  the  con- 
tinent. At  home,  the  prices  of  food  and  raw  material  were  low  ;  stocks 
of  goods  had  been  greatly  reduced  by  limitations  of  production  ;  and  it 
"was  unquestionable  that  the  interruption  of  industry  on  the  continent  had 
diverted  capital  and  employment  to  this  country. 

The  minimum  rate  of  discount  at  the  Bank  of  England  remained  at  3 
per  cent,  per  annum,  as  fixed  on  2d  November,  1848,  and  the  market 
rate  was  2\  to  3  per  cent.  The  total  stock  of  bullion  was  about  fifteen 
millions,  with  a  tendency  to  increase.  Authentic  news  had  arrived  of  the 
discovery  of  gold  in  California,  and  the  discussion  of  the  probable  effects 
to  flow  from  the  discovery  became  a  prominent  and  constant  topic,  the 
tendency  being,  on  the  whole,  to  expect  that  the  new  supplies  of  gold, 
•would  produce  speedy  and  marked  eflfects  on  the  price  of  commodities 
and  securities.* 

The  Bank  of  England  reduced  the  minimum,  rate  to  2|-  per  cent,  on 
the  22d  November,  1849,  the  former  alteration  having  been  to  three  per 
cent,  on  the  2d  November,  1848  ;  the  rate,  therefore,  had  remained  at 
three  per  cent,  for  more  than  a  year.  In  November,  1849,  the  private 
securities  were  low,  say  nine  and  a  quarter  millions,  and  the  total  bullion 
■was  sixteen  millions. 

The  state  of  the  outstanding  circulation  in  October,  1849  ;  the  com- 
mencement of  the  speculative  rise  of  prices  just  referred  to  ;  and  in  De- 
cember, ]  849,  the  month  during  which  the  rise  attained  its  highest  point 
and  greatest  extent,  was  as  follows  : 

6>c!!.,  1849.  JVo«.,1849.  i>ec.,  1849. 

Circulation  of  Millions,  Millions.  Millions. 

Bank  of  England, £  19, 700,000     ..     £19,500,000     ..     £19,000,000 

Country  banks,  (Great  Britain,)     10,000,000     . .  9,900,000     . .  9,400,000 

£29,700,000     ..     £29,400,000     ..     £28,400,000 

The  year  1849  -was  begun  by  most  commercial  men  with  the  confident 
expectation  that  it  would  prove  the  commencement  of  better  times.  It 
was  hoped  that  the  cycle  of  three  years  among  the  most  eventful,  if  not 
the  most  disastrous  on  record,  had  finished  its  course.  But  this  hope  was 
not  fulfilled.  Hostilities  were  renewed  on  the  continent,  and  the  Pun- 
jab war  raged  in  India.     The  continental  disturbances  acted  most  detri- 


*  TooKs's  History  of  Prices,  vol.  v.  p.  241. 


Events  of  the  Year  1850.  397 

mentally  on  commerce  ;  and  it  was  striking  to  notice  how  our  markets 
rose  and  fell  as  the  political  barometer  pointed  either  to  a  fair  or  troubled 
state  of  aflfairs  abroad.* 

Comparative  Prices,  January,  1848,  and  April,  1849. 

Jan.  1848.  April,  1849. 

Coffee, Brit.  Plant, cwt.       25s.    @     12Ss.         ..         20s.    @     100s. 

Spirits, Rum,  Jamaica,. . .  .galL       38d.    @       44d.         . .         30d.    @       34d. 

Sua^ar, Br.  West  Indies, .  .cwt.       21s.    @       29s.  . .         23g.    @       273. 

Tea Congou, lb.         8d.    @       18d.         ..  8d.    @       21d. 

Tobacco Virginia, lb.         2id.  @         5^d.       . .  3id.  @         6d. 

Cochineal, lb.       52d.    @       81d.         ..         44d.    @       64d. 

Cotton  Wool, .  Bowed  Georgia, lb.        44d.  @         6d.         ..  4id.  @         5d. 

Flax, Riga ton,  £44       @£52  ..      £34      @£40 

Hemp, St.  Petersburg,.... ton,  £36       @    £37  ••      £30      @    £31 

Indigo, Bengal, lb.       12d.    @       66d.         ..  15d.    @       66d. 

Logwood, Jamaica, ton,       80s.    @       85s.         . .         95s.    @      lOOs. 

Oil, Gallipolis, tun,   £44       @£45  ..      £42       @£43 

Saltpetre, Rough, cwt.       30s.    @       32s.         . .         28s.    @       30s. 

Silk,  raw. China, lb.       10s.    @       16s.  . .         12s.    @       173. 

Tallow, St.  Petersburgh,..cwt.       44s.    @       45s.         ..         38s.    @       393. 

Timber, Dant, load,       80s.    @       90s.  . .         60s.    @       753. 

Wool,  Sheeps,  Germ,  secunda lb.       22d.    @       25d.         ..         21d.    @       23d. 

Copper, Tough  Eng.  Cake,. ton,  £98       @      £88       @      

Iron, Best  bars, ton,  £    8       @£8J  ..£6       @£7 

Tin, Eng.  bars, cwt.       83s.    @      90s.    @      

The  Year  1850. 

At  the  opening  of  the  year  1850  the  minimum  rate  of  discount  at  the 
Bank  of  England  remained  at  2^  percent.,  as  reduced  to  that  rate  on  the 
22d  November,  1849  ;  the  bullion  was  gradually  increasing;  the  private 
securities  were  low,  and  in  Lombard-street  good  bills  were  readily  dis- 
counted at  2  and  2^  per  cent. 

There  was  an  absence  of  exciting  topics,  the  trade  of  the  country  was 
moderately  active,  and  the  general  impression  pointed  to  the  probability 
of  a  considerable  recovery  from  the  adverse  influences  of  the  two  prece- 
ding years. 

One  of  the  earliest  events  of  the  year  was  the  negotiation,  through 
Messrs.  Baring,  in  January,  of  a  loan  for  Russia  of  £5,500,000,  required, 
it  was  stated,  for  the  completion  of  the  Petersburg  and  Moscow  Railway. 
The  terms  offered  were  a  4^  stock  at  the  price  of  93,  interest  to  com- 
mence from  1st  January,  1850,  with  provision  for  the  reimbursement  at 
par,  at  the  end  of  each  year  for  fifty  years,  of  two  per  cent,  of  the  prin- 
cipal. The  rate  really  offered  was  about  £4  16s.  lOd.  ;f  and  the  whole 
of  the  subscription  was  filled  up  in  a  few  days,  the  scrip  coming  out  at  a 
premium. 

In  March,  a  loan  of  £800,000  for  Denmark  was  readily  raised  by 
Messrs.  Hambro  <fe  Son  in  a  five  per  cent,  stock,  at  the  price  of  90.  The 
scrip  sold  for  two  to  three  premium. 

The  prices  of  cotton  in  Liverpool  in  the  middle  of  May,  1848-1850, 
were  as  follows,  taken  from  the  circular  of  an  eminent  broker  : 

*  Tooke's  History  of  Prices,  vol.  v.  pp.  245,  246.      f  4.84  per  cent,  interest. 
26 


398 


History  of  the  Bank  of  England. 


Description  of  Cotton. 
Bowed  and  Mobile, . . , 


Quality. 
Ordinary, 

Good, 


New-Orleans, Ordinarj-, 


Good, 


Kaw  Cotton. 

Years. 
1848 
1850 
1848 
1850 
1848 
1850 
1848 
1850 


Price  per  lb. 

.  3i-  to  3f 

.  6J  to  6f 

.  4f  to  5 

.  Vi  to  n\ 

.  3i  to  3i 

,  6    to  6| 

.  5i  to  5f 

.  71  to  71 


Being  an  Advance  of 

i  Nearly  84  p.  ct. 


Nearly  56 
About   82 


i  About   38 


The  influx  of  gold  from  California  greatly  occupied  the  public  mind, 
and  the  interest  in  the  question  was  much  increased  by  the  decree  of  the 
Dutch  government  demonetising  gold. 

The  rate  of  discount  remained  very  steady  till  quite  the  end  of  the 
year,  when  the  Bank  of  England  raised  their  minimum  rate  somewhat 
unexpectedly  from  2|-  to  3  per  cent,  on  the  26th  December.  This  step 
was  perfectly  justified  by  the  facts  of  the  case,  for  there  was  a  consider- 
able increase  in  the  private  securities,  and  a  drain  of  bullion  to  the  con- 
tinent. 

The  drain  was  traced  to  a  temporary  disturbance  of  the  previous  rela- 
tive values  of  gold  and  silver,  arising  out  of  the  effects  produced  by  the 
demonetisation  of  gold  in  Holland  in  July,  1850. 

The  rejection  of  gold  from  the  Dutch  circulation,  and  the  existence  of 
a  double  standard  in  France  and  other  continental  states,  led  to  some- 
what novel  combinations  of  leading  elements  in  the  calculation  of  the  for- 
eign exchanges.* 

In  the  early  part  of  1851,  the  drain  of  gold  had  ceased.  The  following 
extract  from  the  circular  of  31st  December,  1850,  of  Messrs.  Stead 
Brothers,  of  Liverpool,  will  show  the  highly  disturbed  state  of  the  cot- 
ton market  at  Liverpool  during  1850:  "In  reviewing  the  cotton  market 
during  the  year  1850,  we  shall  assume  middling  Orleans  as  a  standard  of 
prices.  On  the  1st  January,  1850,  this  quality  was  worth  6^d.  per 
pound,  being  50  per  cent,  higher  than  at  the  commencement  of  1849." 

The  price  of  cotton  in  September,  1850,  was  very  nearly  30  per  cent, 
higher  than  it  had  been  in  January,  1850,  namely,  8d.  per  pound,  against 
Q\di.  And  as  there  is  no  circulation  of  country  notes  at  Liverpool  and 
Manchester,  it  is  curious  to  find  that  the  totals  of  the  outstanding  notes 
of  the  Bank  of  England  were  very  nearly  the  same  at  the  two  periods, 
and  that,  in  point  of  fact,  the  note  circulation  of  1850  was  singularly 
uniform  in  amount,  notwithstanding  the  occurrence  of  those  violent  fluc- 
tuations in  the  price  of  the  greatest  raw  staple  of  the  import  trade. 

Among  the  most  satisfactory  circumstances  of  the  commercial  history 
of  1850,  was  a  decided  improvement  in  the  prices  of  railway  shares,  and 
diminution,  to  a  great  extent,  of  the  more  pressing  difficulties  of  rail-road 
shareholders. 

It  may  also  be  considered  that,  as  a  general  rule,  there  was  a  disposi- 
tion, in  the  latter  half  of  1850,  in  all  the  great  markets  for  produce,  to 


*  TooKK'a  History  of  Prices,  vol.  v.  p.  253. 


Events  of  the  Year  ISBO.  309 

look  forward  to  considerably  higher  prices,  on  the  twofold  ground  of 
increasing  consumption  and  of  probable  failures  of  the  usual  supplies.* 

Scotch  Exchange  Banks,  1845-1850. — The  universality  of  the  specu- 
lation in  railway  shares  in  1845  created,  as  a  matter  of  course,  a  large 
class  of  borrowers,  who  offered  as  security  the  shares  and  scrip  of  railway 
companies  in  which  they  were  interested.  These  loans  were  generally 
required  for  periods  somewhat  indefinite ;  and,  in  most  cases,  the  pro- 
ceeds of  the  loan  were  intended  to  facilitate  further  railway  speculations. 
The  ordinary  banks  had  not  the  means,  and,  greatly  to  their  credit,  not 
the  inclination,  to  encourage  advances  of  this  nature.  It  might  be  true 
that,  at  the  time  when  the  advance  was  made,  the  margin  reserved  on 
the  shares  taken  in  pledge  might  be  considerable,  but  that  margin  could 
not  be  regarded  as  solid,  nor  could  the  punctual  repayment  of  the  advance 
be  reckoned  on  with  certainty.  Hence  arose  the  anomaly  of  a  great 
pressure  of  borrowers  off"ering  high  rates  of  interest  for  nominally  short 
periods,  and  on  highly  marketable  securities,  and  no  class  of  lenders 
with  adequate  inclination  and  means  to  meet  the  demand  for  accommo- 
dation.* 

Early  in  1845,  it  occurred  to  Mr.  George  Kinnear,  a  gentleman  of 
reputation  and  character  as  a  practical  banker,  that  lending  money  on 
railway  shares  might  become  the  special  business  of  a  special  class  of 
banks,  to  be  set  up  for  the  purpose;  that  these  banks  might  obtain  the 
necessary  amount  of  funds,  to  a  small  extent,  by  means  of  their  own  paid 
lip  capital,  but,  to  a  large  extent,  by  means  of  deposits  attracted  to  them 
by  the  offer  of  a  high  rate  of  interest ;  and  that  the  funds  so  acquired 
might  be  exclusively  employed  in  loans  on  railway  shares.* 

In  May,  1845,  Mr.  Kinnear  reduced  his  scheme  to  practice  by  found- 
ing, in  Glasgow,  the  "  Glasgow  Commercial  Exchange  Company."  This 
company  became  at  once  eminently  successful,  and  was  praised  on  all 
hands  as  a  great  discovery.  The  public  placed  deposits  in  the  Exchange 
Bank  for  six  months  certain,  with  three  months'  notice  of  withdrawal,  in 
consideration  of  5^  per  cent,  per  annum ;  that  is,  of  a  rate  twice  as  high 
as  the  deposit  rates  allowed  by  the  ordinary  banks.  These  deposits 
were,  according  to  the  theory  of  the  institution,  to  be  employed  in  lend- 
ing money  on  shares  yielding  an  ample  margin  for  depreciation. 

But  a  single  exchange  bank  was  quite  insufficient  for  Glasgow  in  1845, 
and,  in  a  short  time,  eight  of  these  undertakings  were  set  on  foot,  and 
were  full  of  business.  Similar  banks  rose  at  Edinburgh,  Aberdeen  and 
Dundee,  Unexceptionable  names  appeared  on  the  directorates,  good 
dividends  were  paid,  the  shares  bore  a  high  premium,  and,  for  a  period, 
exchange  banks  seemed  to  stand  above  the  reach  of  danger.* 

But  after  1845  and  1846  came  the  disasters  of  1847.  The  choicest 
railway  securities  fell  VO  or  80  per  cent.  The  pressure  of  calls  produced 
a  pressure  of  sellers,  and  margins  of  20  and  30  per  cent,  disappeared  in 
a  single  turn  of  the  market.  In  addition  to  all  this,  the  exchange  banks 
discovered,  to  their  cost,  that  the  very  precaution  upon  which  they  had 
prided  themselves  as  completing  the  fullness  of  their  command  over  the 


*  Tookk's  History  of  Prices,  vol.  v.  p.  258. 


400  History  of  the  Bank  of  England. 

security  pledged,  namely,  transferring  the  shares  from  the  name  of  the 
borrower  into  their  own,  was  a  source  of  absolute  ruin.  For  as  legal 
owners  of  shares  subject  to  calls,  the  exchange  banks  found  themselves 
stripped  not  merely  of  their  securities,  but  they  also  found  themselves 
compelled  to  pay,  as  calls,  sums  frequently  exceeding  the  original  ad- 
vance. As  for  the  personal  security  of  the  debtor,  it  was  generally 
accounted  for  in  the  insolvent  court.* 

In  the  early  part  of  1849,  nearly  all  the  exchange  banks  were  in  seri- 
ous difficulties.     Before  the  end  of  1850,  they  had  all  been  swept  away. 

It  then  appeared  that,  not  content  with  lending  on  railway  shares, 
most  of  the  banks  had  been  dealers  and  jobbers.  That  in  several  cases 
directors  and  other  leading  persons  in  the  management  had  received 
undue  facilities  for  speculation,  and  that,  generally,  failure  had  arisen 
from  rash  management,  as  well  as  from  external  difficulties.  The  original 
bank,  the  Glasgow  Commercial  Exchange  Company,  were  understood  to 
have  lost  £650,000,  or  nearly  double  the  amount  of  their  capital.  The 
deficiency,  of  course,  had  to  be  provided  by  the  shareholders,  and,  fortu- 
nately for  the  depositors,  the  shareholders  were,  in  most  of  the  cases, 
found  to  be  in  a  condition  to  pay  the  deposits  in  full.* 

The  Year  1851. 

The  year  1851  opened  with  fair  prospects.  Great  expectations  were 
prevalent  of  the  beneficial  impetus  to  be  imparted  by  the  Hyde  Park 
exhibition  to  most  descriptions  of  trade. 

Prices  of  colonial  produce  were  firm,  and  rising;  and  already  the 
export  trade  to  the  United  States  began  to  exhibit  the  influences  of  the 
large  consumption  in  California.  The  unfavorable  feature  of  the  picture 
was  the  straitened  means  of  the  farmers,  arising  out  of  the  shortness  of 
the  harvest  of  1850,  and  also,  in  some  degree,  from  the  transition  from 
the  old  habits  and  arrangements  of  protection. 

The  bank  minimum  rate  of  discount  was  3  per  cent.,  as  fixed  on  the 
26th  December,  1850,  and  remained  at  that  rate  during  the  whole  of 
1851.  In  the  money  market,  capital  was  readily  procurable  at  2j  or  3 
per  cent,  on  first  class  bills. 

In  June  and  July,  the  accounts  received  from  New-York  of  discredit 
and  failures  in  that  and  other  leading  American  cities,  rose  to  a  pitch 
which  excitexl  no  small  alarm.  It  appeared  that  speculative  investments 
in  cargoes  and  goods  to  San  Francisco  were  one  principal  cause  of  the 
pressure  at  New-York.  The  Californian  markets  had  become  completely 
glutted,  and  for  some  time  all  new  supplies  of  goods  were  Avholly 
unsalable. 

In  July,  1851,  a  loan  of  £3,500,000  was  raised  by  Messrs.  Hambro, 
for  the  Sardinian  government.  The  rate  was  85,  in  a  five  per  cent,  stock. 
The  subscription  was  filled  up,  but  the  scrip  came  out  at  a  discount. 

Early  in  September,  an  attempt  was  made  to  obtain,  in  London,  sub- 
scriptions to  a  loan  of  £7,000,000,  for  Austria,  the  rate  of  interest  to  be 


*  Tooke's  History  of  Prices,  vol.  v.  pp.  365-367. 


Hvents  of  the  Year  1851.  401 

5  per  cent. ;  but  the  effort  met  with  no  success.  Lists  were  opened  at 
the  leading  continental  cities,  and  at  Vienna  very  violent  measures  were 
employed  by  the  government  to  force  the  scrip  to  a  premium.  These 
and  other  evidences  of  the  financial  exhaustion  of  some  of  the  leading 
States,  combined  with  the  confident  reports  of  an  approaching  couj)  d'etat 
in  France,  exercised  considerable  influence,  during  the  autumn  of  1851, 
in  restraining  operations. 

Attention  continued  to  be  directed,  during  the  spring  and  summer  of 
1851,  to  the  influx  of  gold  into  France,  and  the  substitution,  in  that 
country,  of  a  gold  for  a  silver  coinage. 

The  Frencii  mint  was  taxed  to  the  utmost  to  convert  into  coin  the 
quantities  of  gold  bullion  deposited  with  it,  and  had  on  hand,  almost  con- 
stantly, as  much  bullion  as  would  require  five  or  six  weeks  uninterrupted 
labor  of  the  whole  establishment  to  render  it  into  the  form  of  twenty- 
franc  pieces.  About  October,  however,  this  pressure  was  abated.  The 
relative  value  of  gold  and  silver,  in  France,  was  approximated  so  closely 
that  there  was  no  longer  suflacieut  inducement  to  force  gold  through  the 
mint,  even  at  the  expense  of  considerable  delay.* 

The  news  of  the  discovery  of  gold  at  Bathurst,  in  New  South  Wales, 
in  May,  1851,  was  published  in  London  on  3d  September. 

Towards  the  end  of  the  year,  several  gold  mining  companies  were 
started  on  the  stock  exchange,  for  explorations  in  California ;  but  they 
met  with  very  small  favor  from  the  public,  and,  with  the  exception  of 
two  or  three,  they  had  but  a  short  career. 

Advance  in  Wages. — Li  Great  Britain,  during  the  six  years,  1851-'56, 
there  has  been  established  a  rise  of  wages  for  all  kinds  of  handicraft  and 
factory  labor  of  between  15  and  20  per  cent,  on  the  rate  current  for  some 
time  prior  to  1851 ;  that  the  largest  per  centage  of  increase  has  occurred 
in  the  wages  of  unskilled  labor ;  and  that,  to  some  considerable  extent, 
more  especially  in  the  better  cultivated  districts,  there  has  been  during 
the  same  six  years  a  decided  tendency  to  a  rise  in  the  wages  of  agricul- 
tural labor;  and  further,  that  in  Ireland  the  improvement  in  wages  among 
mechanics  has  been  nearlj'^  as  great  as  in  Great  Britain,  while  the  rise  in 
the  wages  of  rural  laborers  has  been  decidedly  greater  than  among  the 
rural  laborers  on  this  side  of  St.  George's  Channel. 

The  seven  topics  of  inquiry  which  met  us  at  the  threshold  of  this  in- 
vestigation have  now  been  exhausted,  so  far  as  our  present  extent  of  evi- 
dence enables  us  to  deal  with  questions  so  large  and  difficult. 

We  have  found,  in  a  few  words,  that  in  1856,  and  for  four  years  pre- 
ceding 1856,  the  annual  supplies  of  gold  have  been  fourfold  the  amount 
of  the  annual  supply  in  1848  ;  that  in  the  eight  years,  1849-56,  the  ad- 
dition made  to  the  total  stock  of  gold  existing  in  1848  in  various  forms, 
in  Europe  and  America,  has  been  equal  to  more  than  one-fourth ;  that 
the  addition  made  by  new  gold  coinage  to  the  quantity  of  metallic  circu- 
lation in  the  leading  commercial  countries  has  been  more  than  one  third; 
that,  according  to  the  best  conclusions  which  can  be  drawn  from  the  ex- 
perience of  this  country,  the  range  of  general  prices  has  not  been  materially 


Tooke's  History  of  Prices,  vol.  y.  p.  261. 


402  History  of  the  Bank  of  England. 

influenced  so  far  by  these  large  additions  to  the  metallic  money  ;  that  the 
wages  of  labor,  particularly  of  unskilled  labor,  have  risen  in  the  propor- 
tion of  15  to  20  per  cent. ;  and  that  since  1850,  the  social  and  commer- 
cial phenomena  which  have  been  most  conspicuous  in  tliis  country  have 
been  the  effects  produced  by  the  gold  discoveries  in  doubling  the  export 
trade;  in  directing  to  useful  purposes  pauper  and  surplus  labor;  and,  as 
we  have  seen  in  former  portions  of  these  volumes,  in  averting  on  several 
occasions  the  financial  perils  which,  under  other  circumstances,  M^ould 
have  aggravated  the  pressure  of  the  war,  the  failures  of  the  seasons,  and 
the  reverses  of  trade.* 

The  leading  events  of  a  commercial  and  financial  character,  during  the 
years  1846-1850,  were  the  following:  1846. — Oregon  treaty  between 
England  and  the  United  States,  signed  in  London,  l7th  July.  Second 
failure  of  the  potato  crop  in  Ireland.  National  testimonial  to  Rowland 
Hill.  Bankruptcy  spreading  widely  in  Ireland.  Steamship  Great 
Britain  stranded  in  Dundrum  Bay,  22d  October.  Declaration  of  war 
with  Mexico  by  the  United  States,  i2th  May.  New  tariff  bill  passed  by 
Congress,  28th  July.  Veto  of  French  spoliation  bill  by  President  Polk, 
8th  August.  California  taken  by  United  States  troops.  1847. — United 
States  ship  Jamestown  left  Boston,  28tli  March,  and  frigate  Macedo- 
nian, 18th  July,  with  provisions  for  the  relief  of  the  Irish.  Great  com- 
mercial distress  throughout  Great  Britain,  and  destitution  in  Ireland, 
September  to  November.  Baron  Rothschild  elected  member  of  Parlia- 
ment. Oregon  treaty  with  England  ratified  by  United  States.  1848.^- 
The  State  of  Maryland  resumed  payment  of  interest,  1st  January. 
Treaty  of  peace  between  Mexico  and  United  States,  signed  30th  ^la,y. 
Suspension  bridge  at  Niagara  Falls  completed,  29th  July.  French  revo- 
lution, February  22-26.  Abolition  of  slavery  in  French  West  India 
Islands.  Edict  ib  incorporate  Bank  of  France  with  nine  branches,  27th 
April.  India-rubber  life-preservers  invented.  Great  chartist  meeting  on 
Kensington  Common,  April  10.  John  Mitchell  arrested.  May.  Sir 
Roderick  Murchison  suggests  the  existence  of  gold  in  Australia.  Gold 
discovered  in  California.  Deposits  in  United  States  mint,  December. 
1849. — Penny  postage  adopted  in  Prussia.  First  experiment  of  a  sub- 
marine telegraph  at  Folkstone.  Hudson  Railway  frauds  in  England. 
Opening  of  the  London  Coal  Exchange,  October  30.  Fraud  on  the  Roch- 
dale Savings  Bank,  £50,000.  1850. — Invasion  of  Cuba  by  Lopez. 
£20,000  reward  offered  by  Parliament  for  discovery  of  Sir  John  Frank- 
lin, 8th  March.  Collins'  line  of  steamers  to  Liverpool  commenced 
operations.  Steamer  Atlantic  left  New-York,  27th  April.  The  cele- 
brated Koh-i-noor  diamond,  valued  at  82,000,000,  brought  to  England, 
July.  Tubular  bridge  over  the  Menai  finished.  Death  of  Sir  Robert 
Peel,  July  2,  aged  62. 

*Tooke's  History  of  Prices,  vol.  vi.  pp.  176-178. 


Events  of  the  Year  1852.  403 

CHAPTER    V. 

The  Years  1852,  1853,  1854. 

THE  TEAR  1852 REDUCED  VAXUES  OF  FOREIGN    STAPLES FLUCTUATIONS  IN  fRICES — SPEC- 
ULATION   IN    AUSTRALIAN  GOLD  MINING  SHARES — INCREASED    CONSUMPTION    OF  COTTON 

IMPORTS    AND    EXPORTS  OF    THE    PRECIOUS    METALS THE   TEAR    1853 EXTRAORDINARY 

LOW  RATE  OF  INTEREST OVER-TR.U)ING  IN  CONSEQUENCE STRIKES  FOR  WAGES  IN  LON- 
DON AND  IN  THE  COTTON  DISTRICTS W.\R  BETWEEN  RUSSIA  AND  TURKEY EXTRAORDI- 
NARY    PROSPERITY     OF    THE     SHIPPIXG    INTEREST HEAVY    IMPORTS     OF      TIMBER     FROM 

AMERICA THE  YEAR  1854 WAR  WITH  RUSSIA CALIFORNIA  TRADE  IN  EXCESS FORTU- 
NATE   RECEIPTS    OF    GOLD    FROM    AUSTRALIA RATE    OF     INTEREST    ON    THE  CONTINENT 

FLUCTUATIONS  IN  FREIGHTS SUMMARY  OF  EVENTS  FOR  FOUR  YEARS  PAST. 

The  Year  1852. 

The  discredit  in  the  produce  market,  which  had  been  so  severely  felt 
in  1851,  reappeared  in  some  degree  during  the  first  two  months  of  1852. 
But  in  almost  all  other  respects,  the  year  opened  favorably.  Some  dis- 
trust was  occasioned  by  the  then  recent  coup  d'etat  in  France,  and  by  per- 
plexities in  other  parts  of  Europe. 

The  bank  reduced  its  minimum  rate  from  3  to  2|-  per  cent,  on  2d 
January,  and  further  reduced  the  rate  to  two  per  cent,  on  the  22d  April. 
About  the  latter  date  the  total  bullion  exceeded  twenty  millions,  and  con- 
sols were  at  par. 

About  May,  there  set  in  an  enormous  and  increasing  tide  of  emigration 
to  Australia  from  England  and  Ireland.  Deputations  had  arrived  from 
Sydney  and  Melbourne,  urging  the  necessity  of  large  supplies  of  laborers ; 
and  the  persons  engaged  in  the  woollen  manufacture  aided  the  cry,  under 
the  apprehension  that  the  wool  clip  in  Australia  would  be  seriously  jeop- 
ardized by  the  desertion  of  shepherds  for  the  diggings.  For  a  consider- 
able period,  emigrant  vessels  could  not  be  dispatched  from  this  country 
with  a  rapidity  at  all  proportioned  to  the  demand. 

One  of  the  most  remarkable  circumstances  connected  with  the  Austra- 
lian discoveries,  was  the  extraordinary  rise  in  the  value  of  the  shares  of 
the  Australian  Agricultural  Company — a  company  of  great  respectability, 
which  had  been  established  in  London,  since  1825,  for  the  purpose  of 
developing  a  large  tract  of  land  near  Sydney,  in  New-South  Wales.  To- 
wards the  close  of  1852,  news  arrived  that  gold  had  been  discovered  on 
the  estate  of  the  company.  The  shares  were  £35  paid,  and  had  been 
quoted  for  some  time  at  £15  each.  They  rose  rapidly  to  £90,  then  to 
£150,  and  then  to  £300,  and  remained  at  the  last  named  price  for  a  few 
weeks.  Ultimatelj',  however,  it  appeared  that  the  estate  did  not  contain 
any  large  quantity  of  gold,  and  the  shares  gradually  declined  in  price. 

From  July  to  November,  1852,  there  was  considerable  activity  in  the 
formation  of  new  joint  stock  companies,  and  railway,  mining,  emigration 


404  History  of  the  Bank  of  England. 

and  other  companies  were  plentifully  announced.  This  circumstance 
in  the  history  of  1852,  will  be  found  to  be  alluded  to  more  at  length  in 
the  fifth  part  of  these  volumes,  relating  to  banking,* 

Coffee,  sugar,  tea  and  tobacco  were  25  per  cent,  cheaper  in  November, 
1851,  than  in  January,  1850;  so  were  cotton,  logwood,  oil,  saltpetre,  tim- 
ber and  iron  ;  and  yet  we  find,  that  at  the  period  when  prices  were  thus 
reduced,  the  circulation  was  more  than  a  million  higher  than  when  prices 
were  at  their  maximum. 

We  had  learned  from  the  various  circulars,  that  1851  was  a  year  of 
extensive  and  ruinous  fluctuations  in  prices,  and  of  fluctuations  upon  the 
largest  scale,  and  yet  it  was  a  year  of  remarkable  steadiness  in  the  amount 
of  circulation  in  the  rate  of  discount,  and  in  the  price  of  the  public  se- 
curities. 

The  highest  monthly  average  of  the  Bank  of  England  circulation  was 
in  Jul}^,  when  the  amount  was  £21,400,000,  and  July  was  among  the 
gloomiest  months  of  the  whole  twelve. 

The  lowest  monthly  average  was  in  December,  when  the  figures  were 
£19,900,000,  so  that  there  was  a  difi"erence  of  only  one  and  a  half  mil- 
lions between  the  extreme  points  of  the  scale. 

The  bank  minimum  rate  remained  at  three  per  cent,  (as fixed  20th De- 
cember, 1850,)  during  the  whole  of  1851  ;  and  the  market  rate  was  about 
two  and  a  half  to  three  per  cent,  with  a  decided  tendency  to  decline.  The 
price  of  consols  varied  between  96  and  98.* 

To  what  then  are  we  to  trace  the  violent  fluctuations  of  prices  in- 
1851  ?  One  of  the  circulars  just  quoted  gives  the  answer  very  plainly, 
namely  : 

"  In  1850,  prices  had  in  most  cases  risen  considerably  above  the  ordi- 
nary level,  from  the  expectation  that  the  supplies  of  1851  would  be  in- 
adequate to  the  demand.  The  reports  from  the  producing  countries,  in 
reference  particularly  to  cotton,  coffee,  indigo,  &c.,  were  very  unfavorable. 
As  the  year  1851  drew  on,  these  anticipations  were  all  found  to  be  more 
or  less  illusory,  and  prices  fell." 

"  We  have  never  known,  in  our  long  experience,  a  year  of  greater 
activity  in  the  cotton  manufacturing  districtsf  of  England,  than  1852, 
The  consumption  of  the  raw  material  is  without  precedent,  being  37,000 
bales  weekly,  against  32,000  bales  in  1851,  and  29,000  in  185^0.  Still 
we  have  not  had  overstocked  markets,  either  at  home  or  abroad,  and  at 
the  present  time,  the  stocks  both  of  yarn  and  goods  are  small,  and  there 
are  in  hand  very  extensive  contracts.  Our  spinners  and  manufacturers 
have  had  a  prosperous  year,  and  our  operatives  have  exhibited  a  contcnt- 
edness  and  cheerfulness  beyond  what  we  have  ever  before  witnessed," 

The  imports  and  exports  of  the  precious  metals  into  and  from  England 
in  1852  attained  a  magnitude  far  greater  than  that  of  any  former  year. 

At  the  close  of  the  year,  the  Morning  Chronicle  stated  that,  according 


*  Tooke's  Hiatory  of  Prices,  vol.  v.  p.  267. 

f  It  will  be  borne  in  mind  that  England  wa3  exporting  more  largely  to  the 
United  States  in  her  cotton  goods,  leading  in  part  to  the  financial  revulsion  of  the 
year  1857. — Am.  Ed. 


Events  of  the  Year  1852.  406 

to  inquiries  carefully  instituted  by  it,  the  following  figures  might  be 
taken  to  represent,  with  approximate  aocuraoy,  the  magnitude  of  the  im- 
ports and  exports  of  the  precious  metals  and  of  specie,  viz. : 

Gold  and  Silver  Bullion  Gold  and  Silver  Coin 

Imported  into  United  Kingdom.  Exported  from  United  Kingdom. 


1852.                    From  From,                                            To  To 

Three  Months.    Australia.  Other  I'liices.        Total.  Australia.  Other  Places.      Total. 

Millions.  Millions.  Millions.        Millions.  Millions.    Millions. 

£  £                       £                     £  £  £ 

Jan.— March, . ,  .14  ..  3.64  ..  3.78  ..  .10  . .  1.88  ..  1.98 

April— June,  . .  2.67  . .  2.73  . .  5.40  . .  .42  . .  1.66  . .  2.08 

July— Sept., .. .  1.19  ..  3.98  ..  5.17  ..  1.21  ..  2.07  ..  3.28 

Oct.— Dec., . . . .  3.28  ..  2.70  ..  5.97  ..  1.21  ..  3.94  ..  5.15 

Millions, 7.28     . .      13.04        . .     20.32     . .     2.93     . .      9.56      . .     12.50 

This  table  does  not  distinguish  g©ld  from  silver ;  but  the  imports  from 
Australia  were  Avholly  gold,  and  so  were  the  exports  to  Australia.  The 
imports  from  other  places  were  partly  silver,  and  of  the  exports  to  other 
places — India,  for  example — the  exports  were  principally  silver.  The 
annual  circulars  at  the  end  of  1852  were  exceedingly  favorable.* 

The  Sujyply  of  Gold  postpones,  hut  does  not  avert,  danger. — A  great 
increase  in  the  supply  of  the  precious  metals  for  the  use  of  the  globe, 
such  as  has  occurred  since  1852,  from  the  discovery  of  the  rich  gold-fields 
of  California  and  Australia,  which  raised  the  annual  produce  of  the  mines 
from  eight  or  ten  to  thirty -six  millions  a  year,  may  for  a  time  avert,  but 
it  cannot  permanently  remove,  this  danger.  When  gold  is  every  week 
pouring  in  immense  quantities  into  the  vaults  of  the  Bank  of  England, 
and  the  drain  arising  from  the  balance  of  trade  is  met  by  a  never-ceasing 
influx  from  the  gold  regions,  credit  may,  for  a  considerable  period,  be 
maintained,  and  commerce  be  prosperous,  because  a  sufficient  stock  of 
gold  may  be  retained  notwithstanding  that  drain.  But  it  is  obvious  that 
this  auspicious  state  of  things  cannot  be  of  long  endurance,  and  that,  ere 
long,  the  old  risk  must  reappear,  possibly  under  still  more  threatening 
circumstances.  The  reason  is  obvious.  The  rise  of  prices  consequent  on 
such  an  increased  influx  of  the  precious  metals  is,  or  must  soon  become, 
universal  over  the  ivorld  ;  consequently,  the  issue  of  the  precious  metals 
to  pay  the  balance  of  trade  must  be  augmented  in  as  great  a  proportion 
as  the  influx  is  increased.  AVhat  will  it  avail  the  nation  that  the  supply 
of  gold  and  silver  to  the  Bank  of  England  is  increased  in  a  year  from  ten 
to  thirty  millions,  if,  as  fast  as  it  flows  in,  it  is  drawn  out  to  meet  the  in- 
creased balance  of  trade  arising  from  the  enhanced  price  of  every  species 
of  imported  commodity  ?  Accordingly,  at  the  moment  when  these  lines 
are  written,  (Nov.  17,  1856,)  the  stock  of  gold  in  both  departments  of 
the  Bank  of  England  is  reduced  to  £9,540,000,  interest  is  7  per  cent., 
credit  is  almo.st  suspended,  and  two  more  adverse  weeks,  such  as  the  two 
last,  would  render  a  suspension  of  the  bank  charter  act  indispensable.f 
And  all  that  in  the  face  of  an  annual  influx  of  the  precious  metals  to  the 

*  Tooke's  History  of  Prices,  vol.  v.  p.  269. 
f  Alison's  Europe,  vol  viii. 


406  History  of  the  Bank  of  England. 

extent  of  between  thirty  to  forty  millions  a  year;  and  an  affluence  of 
capital  in  the  British  Islands  unequalcd  in  the  history  of  the  world.* 

Argument  on  the  other  side  as  to  the  Export  of  Gold. — It  is  often  said 
that  this  great  export  of  the  precious  metals,  which  is  the  invariable  re- 
sult of  free  trade,  is  of  no  consequence,  because  the  gold  or  silver,  being 
valuable  commodities,  could  not  have  come  to  this  country  but  in  ex- 
change for  something  of  equal  value ;  and  therefore  a  great  import  of 
gold  implies  a  proportionally  great  export  of  manufactures  to  purchase 
it.  But  the  answer  to  this  is  three-fold  and  decisive.  First,  it  is  by  its 
derangement  of  a  currency  resting  on  the  retention  of  the  precious  metals 
that  this  exportation  to  any  great  extent  becomes  so  serious  a  matter. 
If  the  nation  possessed  a  currency  adequate  to  its  necessities,  and  yet 
duly  limited,  indejjendent  of  gold,  that  metal  might  all  go  away  witliout 
inducing  a  greater  evil  than  the  efflux  of  lead  or  iron.  The  peril  of  a 
great  export  of  gold  to  pay  an  adverse  balance  of  trade,  therefore,  is  no- 
wise lessened,  even  though  the  whole  of  it  had  come  in  to  pay  the  price 
of  manufactures  exported.  In  the  next  place,  great  part  of  the  gold 
■which  finds  its  way  to  the  Bank  of  England  is  not  brought  to  the  British 
shores  in  payment  of  any  manufactures  or  British  produce  whatever,  but 
is  simply  a  remittance  of  wealth  made  in  the  gold  regions,  or  of  commer- 
cial fortunes  realized  there,  from  the  impulse  given  to  every  species  of 
industry  by  the  gold  discoveries.  These  are  remitted  home,  or  brought 
by  the  fortunate  holders  without  any  corresponding  export  of  British 
manufactures  paid,  as  money  forming  part  of  rents  or  surplus  wealth  is 
remitted  from  Scotland  or  Ireland  to  London  to  be  spent.  In  the  third 
place,  what  is  most  material  of  all,  the  import  and  export  of  gold,  or  any 
other  article  of  import,  differs  in  this  vital  respect  from  the  export  of  na- 
tive produce  or  manufactures,  that  a  double  import  takes  place,  but  only 
a  single  export  of  the  produce  of  British  industry.  If  £5,000,000  worth 
of  English  manufactures  are  sent  to  America  or  Australia  to  buy  an 
equal  amount  of  gold,  there  is  an  equal  balance  of  imports  and  exports. 
But  if  the  £5,000,000  worth  of  gold  is  immediately  exported  to  buy 
foreign  grain,  the  imports  are  £10,000,000,  while  the  exports  of  British 
produce  are  only  £5,000,000.  This  would  be  immaterial  if  the  gold  was 
a  mere  article  of  commerce,  like  sugar  or  molasses ;  but  it  becomes  very 
different  when,  in  addition  to  that,  it  is  the  sole  foundation  of  currency 
and  credit,  on  the  abstraction  of  which  both  fall  to  the  ground. 

Danger  of  Gold  passing  merely  through  the  richer  States. — There  is 
another  consideration  of  the  very  highest  importance  connected  with  this 
matter  of  a  great  influx  of  gold  from  the  gold  regions  into  the  British 
Islands,  especially  when  a  great  import  of  foreign  goods  is  at  the  same 

*  This  state  of  things  has  extorted  the  following  just  observations  from  the  ablest 
organ  of  the  united  bullion  and  free  trade  systems :  "  A  uniform  jDrice  of  7  per  cent, 
for  the  use  of  money  is  a  state  of  things  which,  though  happily  unintelligible  to 
many  of  our  readers,  is  equivalent  in  its  effects  to  a  great  national  disaster.  Fam- 
ine, pest,  earthquake,  floods,  conflagrations  and  shipwreck,  inflict  local  or  personal 
injurj^  A  very  high  rate  of  interest  in  a  country  where  it  is  unusual,  will  produce 
a  greater  amount  of  inconvenience  than  any  one  of  them.  It  afi'ects  the  whole  atmos- 
phere of  trade,  and  particularly  of  that  which  is  not  strictly  trade,  but  of  a  more 
speculative  character,  such  as  transactions  in  funds  andshares. — Times,  Nov.  15, 1856. 


Events  of  the  Year  1853.  407 

time  going  on.  It  is  this  :  -when  gold  in  great  quantities  flows  into  the 
ricli  State,  eitlier  from  its  own  colonies  or  foreign  countries,  it  necessarily 
becomes  cheap,  because  it  is  plentiful,  and,  of  course,  all  other  commodi- 
ties become  comparatively  dear.  But  this  state  of  things  cannot  long 
continue ;  it  is  speedily  corrected  by  the  efllux  of  gold  to,  and  imports  of 
commodities  from,  poorer  States,  in  which  the  former  is  inore  valuable, 
because  it  is  more  scarce — the  latter  cheaper,  because  labor  is  less  highly 
paid.  Thus,  the  constant  tendency  of  commerce,  in  such  an  old  and 
commercial  State,  is  to  run  into  an  cffiiix  of  gold,  and  influx  of  commodi- 
ties. The  country  which  the  gold  first  reaches  becomes  a  mere  siphon, 
by  which  it  is  conducted  to  foreign  States.  No  state  of  traffic  can  be 
conceived  more  perilous,  especially  when  currency  and  credit  are  ren- 
dered dependent  on  the  retention  of  the  precious  metals ;  for  the  first 
keeps  credit  constantly  on  the  verge  of  paralysis,  the  last  industry,  under 
the  weight  of  irresistible  foreign  competition.  Adam  Smith  long  ago 
stated  this  low  price  of  gold  in  Spain,  and  its  constant  tendency  to  leave 
the  country  in  consequence,  arising  from  the  possession  of  the  gold  re- 
gions, which  all  the  severity  of  the  laws  could  not  prevent,  as  the  main 
cause  of  the  decline  of  old  Spain ;  and  whoever  studies  with  attention 
the  history  of  this  country,  since  the  gold  discoveries  came  into  opera- 
tion, in  1852,  Avill  have  too  much  reason  to  fear  that  the  same  lasting  and 
insurmountable  difficulty,  as  long  as  the  currency  is  based  on  gold,  is  be- 
ginning to  aftect  its  fortunes.* 

The  Year  1853. 

The  year  1853  witnessed  the  climax  of  the  first  series  of  effects  arising 
from  the  discoveries  in  California  and  Australia.  For  the  rising  prices — 
the  expanding  consumption — the  growth  month  by  month  of  the  export 
trade — the  demand  for  more  ships — the  requirements  for  more  labor  of 
every  kind,  which  had  marked  the  latter  half  of  1852,  attained  for  a 
time  their  highest  pitch  in  the  first  nine  months  of  1853. 

It  was  also  during  those  nine  months  that  measures  were  propounded 
to  Parliament,  and  adopted  by  it,  for  enabling  the  public  to  convert  three 
per  cent,  consols  into  a  new  stock  bearing  only  two  and  a  half  per  cent. 
Within  the  same  period,  also,  the  movement  of  the  working  classes  for 
higher  w-ages  attained  its  greatest  development.  The  closing  months  of 
the  year  brought  many  reversals  and  correctives  of  the  excitement  of  the 
earlier  portion. 

The  possibility  of  European  war  had  become  almost  a  certainty ;  an 
exceedingly  bad  harvest  had  aroused  serious  apprehensions  as  to  the 
supply  and  price  of  food ;  the  rate  of  interest  had  risen  so  rapidly, 
that  for  some  weeks  there  was  financial  pressure ;  a  sharp  revulsion  had. 
occurred  in  the  demand  for  goods  for  Australia,  for  the  markets  there 
were  already  glutted. f 

The  opening  of  1853  was  marked  by  two  measures  of  the  Bank  of 


*  Alison's  Europe,  vol.  viii. 

f  Tooke's  History  of  Prices,  vol,  v.  p.  272. 


408  History  of  the  Bank  of  England. 

England  for  raising  the  minimum  rate  of  discount.  That  rate  had  been 
two  per  cent,  since  April,  1852  ;  on  the  6th  January,  1853,  it  was  raised 
to  two  and  a  lialf,  and  on  the  20th  January  to  three  per  cent.  The  total 
amount  of  bullion  had  been  twenty-two  millions  in  July,  1852  ;  in  Janu- 
ary, 1853,  the  bullion  had  fallen  to  nineteen  and  a  half  millions,  and  the 
private  securities  had  risen,  from  eleven  millions,  in  November,  1852,  to 
fourteen  millions.  But  the  maintenance,  for  nine  months,  of  a  rate  so  low 
as  two  per  cent.,  the  constant  arrivals  of  new  gold,  and  the  evidences  of 
a  great  prosperity  on  all  sides,  had  produced  a  moral  effect  on  the  public 
mind  so  strong,  that  the  rise  of  the  minimum  rate  in  January,  1853, 
excited  very  general  surprise,  and  led  to  some  loud  expressions  of  dis- 
content. 

There  had  occurred  in  1852,  what  has  always  occurred  under  similar 
circumstances  of  a  very  low  rate  of  interest,  advertised  and  fostered  by 
the  Bank  of  England.  The  great  mass  of  the  tradihg  public  had  assumed, 
or  persuaded  themselves,  that  because  the  l>ank  of  England  had  thought 
it  consistent  with  its  public  duty  and  its  general  interest  to  maintain  for 
a  considerable  period  a  rate  of  two  per  cent.,  it  was  a  safe*  and  admis- 
sible course  to  enter  into  large  and  distant  engagements  ;  and  when  the 
course  of  the  bank  was  changed,  there  was  an  evident  disposition  to  find 
fault,  and  to  affirm,  that  if  the  sudden  augmentations  of  January,  1853, 
were  necessary,  the  extreme  depression  of  April,  1852,  ought  not  to  have 
taken  place.f 

The  minimum  rate  remained  at  three  per  cent,  from  the  20th  January, 
1853,  to  the  2d  June,  1853.  It  was  then  farther  raised  to  three  and  a 
half  per  cent.  The  total  bullion  in  June  was  eighteen  and  a  half  mil- 
lions, and  the  private  securities  thirteen  and  a  half  millions. 

The  measure  of  the  2d  June  led  to  renewed  discussion.  The  resolu- 
tion of  the  directors  of  the  Bank  of  England  to  adopt  three  and  a  half 
per  cent,  as  their  minimum  rate  of  discount,  established  a  rise  in  the  rate  of 
interest  on  bills  of  exchange,  and  on  commercial  securities  of  an  analo- 
gous character,  fully  equal  to  one  and  a  half  per  cent.,  in  the  space  of  little 
more  than  five  months.  So  important  an  alteration  in  so  short  a.  time, 
and  so  little  corresponding  with  views  and  anticipations  which  were  very 
generally  entertained,  could  hardly  fail  to  excite  attention.  In  the 
autumn  of  1852,  the  condition  of  the  money  market,  as  regarded  the 
rate  of  interest,  was  very  different  from  what  it  was  in  June,  1853,  At 
the  former  date,  the  Bank  of  England  minimum  rate  was  two  per  cent. ; 
the  total  stock  of  bullion  in  the  two  departments  of  banking  and  issue 
was  larger  than  at  any  former  period. 

In  the  first  week  of  January,  1853,  the  Bank  of  England  raised  its  rate 
of  interest  from  two  to  two  and  a  half  per  cent.,  and  that  measure  taking 
the  public  very  much  by  surprise,  led  to  discussions  and  investigations 
which  were  of  infinite  service  in  correcting  many  prevalent  opinions.     It 


*  Herein  consists,  we  think,  the  error  of  the  bank  in  cheapening  money  tempora- 
rily for  the  sake  of  its  own  profit,  not  for  the  pubhc  good,  but  leading  the  public 
astray. — Am.  Ed. 
f  Tooke's  History  of  Prices,  vol.  v.  273. 


Events  of  the   Fear  1853.  409 

was  found  that  the  foreign  trade,  notwithstanding  the  rapid  increase  in 
the  value  of  British  exports,  was  in  a  condition  which  seriously  affected 
the  rates  of  exchange,  for  it  had  led  to  an  export  of  bullion  from  Great 
Britain  of  sufficienf  magnitude  not  only  to  carry  off,  as  they  arrived,  the 
supplies  from  Australia,"but  also  to  diminish  the  stock  of  bullion  previ- 
ously in  the  possession  of  the  Bank  of  England.  And  it  was  also  found, 
that  whatever  might  have  been  the  previous  theories  as  to  a  necessary 
reduction  of  the  rate  of  interest,  the  time  had  arrived  when  the  directors 
of  the  Bank  of  England,  guided  by  the  ordinary  rules  of  that  establish- 
ment, could  no  longer  discount  bills  at  the  low  rate  which  had  prevailed 
for  some  months.  In  short,  it  became  clear  that,  whatever  might  be  the 
cause,  there  had  been  some  precipitation  in  concluding  that  the  supply  of 
capital  in  the  country  had  become  so  much  greater  than  the  demand,  as  to 
render  necessary  a  sensible  reduction  both  in  the  rate  of  discount  and  of 
interest ;  that  is  to  say,  both  in  the  rate  at  which  money  or  capital  is  ad- 
vanced on  mercantile  securities  for  short  periods,  and  also  in  the  terms 
on  which  capital  is  advanced  on  mortgages,  debentures,  and  analogous 
securities  of  a  permanent  character  for  long  periods.  A  second  rise  of 
the  bank  rate  took  place  from  two  and  a  half  to  three  per  cent.,  and  the 
increase  of  the  2d  June  further  raised  the  minimum  rate  to  three  and  a 
half  per  cent.* 

The  country  had  begun  to  feel  the  effects  of  the  impetus  which  had 
been  given  to  every  kind  of  enterprise  and  industry ;  and  the  higher 
rate  of  interest  in  1853,  instead  of  being  traceable  to  commercial  difficulty 
or  panic,  seems  rather  the  natural  result  of  a  state  of  things  in  which  the 
price  of  the  use  of  capital  had  been  raised,  because  the  demand  for  it  was 
so  far  in  advance  of  the  supply  as  to  enable  capitalists  to  obtain  more  ad- 
vantageous terms.  It  was  not  easy  to  lay  down  any  specilic  rules  or 
tests  by  which  to  ascertain  whether  or  not  we  had  reached  what  might 
be  called  a  normal  condition  under  the  altered  circumstances.  It  was 
clear  the  three  and  a  half  per  cent,  was  a  rate  of  discount  likely  to  exer- 
cise considerable  influence  on  the  supplies  of  capital  for  really  useful  pur- 
poses. 

The  bank  minimum  rate  was  raised  from  three  and  a  half  to  four  per 
cent,  on  the  1st  September,  to  four  and  a  half  per  cent,  on  the  15th 
September,  and  to  five  per  cent,  on  the  29th  September,  1853.  Between 
June  and  the  end  of  September,  the  total  bullion  had  declined  three 
millions,  (18^  to  15^,)  and  the  private  securities  had  risen  about  three 
millions.* 

There  cannot  be  any  doubt  that  the  real  foundations  for  the  rise 
in  the  rate  of  interest,  which  had  been  going  on  steadily  for  the  first 
nine  months  of  1853,  were  laid  widely  and  deeply  during  the  twelve 
months  ending  with  December,  1852,  and  more  particularly  during  the 
nine  months  of  that  year  which  immediately  followed  the  reduction  of 
the  bank  rate  to  two  per  cent.  In  all  shapes,  on  all  sides,  among  all 
classes,  engagements  were  made  and  enterprises  were  started,  implying 
sooner  or  later  the  employment  of  more  capital.     There  was  every  appa- 


*  Tooke's  History  of  Prices,  vol.  v.  p.  2*79. 


410  History  of  the  Bank  of  England. 

rent  inducement  for  embarking  in  sucli  adventures,  for  the  common  topic 
of  conversation  was  the  boundless  prospect  of  wealth  opened  to  us  by  the 
Australian  discoveries  and  the  Australian  markets,  and  the  utter  Jhope- 
lessness  of  ever  seeing  again  a  liigh  rate  of  interest  in  this  country. 

Among  the  most  remarkable  of  the  commercial  phenomena  of  the  nine 
months  preceding  June,  1853,  had  been  the  steady  continuance  of  the 
export  of  gold  from  England  to  the  continent  of  Europe,  and  to  other 
places  besides  Australia.  The  exportation  of  gold  to  Australia  had  arisen 
from  peculiar  causes.  The  export  to  foreign  countries  was  still  going  on, 
and  was  likely  to  do  so,  in  spite  of  the  great  expansion  of  the  foreign 
trade,  and  in  spite  of  an  export  of  commodities  exceeding  that  of  any  ^?re- 
ceding  period. 

About  the  middle  of  July,  1853,  there  occurred  in  London,  and  in 
some  of  the  large  towns,  extensive  and  systematic  strikes,  on  the  part  of 
artisans  and  laborers,  for  higher  wages. 

The  example,  perhaps,  was  set  by  the  strike  of  the  London  cabmen, 
against  the  bill  introduced  into  Parliament  by  the  Home  oflBce,  for  fixing 
the  fares  at  sixpence  per  mile,  a  measure  of  interference  certainly  not 
easy  to  defend.  There  were  combinations  among  the  lightermen  em- 
ployed on  the  river,  among  the  laborers  in  the  docks,  among  large  classes 
of  artisans  on  the  south  side  of  the  Thames,  and  among  other  classes  of 
workpeople.  The  artisans  employed  in  the  building  trades  in  London, 
namely,  masons,  bricklayers  and  carpenters,  demanded  and  obtained  arise 
of  ten  per  cent,  in  their  wages,  and  also  a  diminution  of  two  hours  per 
week  in  their  work. 

"  Thus,  independent  of  several  minor  and  isolated  strikes  in  Manches- 
ter and  Bury,  where  about  1,000  hands  are  '  turned  out,'  Bolton,  Newton, 
Heath,  &c.,  there  are  at  least,  in  the  four  centres  of  Burnley,  Bacup, 
Preston  and  Wigan,  closed,  183  mills,  of  the  aggregate  force  of  7,400 
horse-power,  with  2,310,086  spindles,  and  41,867  looms,  and  47,100  op- 
eratives unemployed. 

"  It  is  no  exaggerated  estimate,  to  calculate  the  number  of  workpeople 
now  on  *  strike'  in  this  county  at  50,000,  and  the  average  loss  of  wages 
at  £26,000  weekly."* 

On  the  3d  October,  1853,  the  Porte  declared  war  against  Russia,  unless 
the  principalities  were  evacuated  in  fifteen  days.  On  the  6th  October, 
the  Bank  of  France  raised  its  rate  of  discount  from  three  to  four  per 
cent.  On  the  28th  October  intelligence  was  received  in  London  of  the 
actual  commencement  of  hostilities  between  the  Turkish  and  Russian 
armies  on  the  Danube. 

The  bank  note  circulation  of  1852  and  1853  was,  on  the  average, 
about  two  and  a  half  millions  higher  than  in  the  preceding  year,  but  the 
highest  range  of  the  circulation  was  from  May,  1852,  to  July,  1853.  The 
country  circulation  remained  very  nearly  stationary.  The  increase  of 
wages  and  transactions,  the  remittance  and  conveyance  of  bank  notes  to 
Australia  for  emigration  and  other  purposes,  and  the  legal  restrictions  on 


*  Mr.  Horner's  Report  on  the  Rise  of  Wages  in  Lancashire ;  Tooke's  History  of 
Prices,  vol.  v.  p,  292. 


Events  of  the  Tear  1854.  411 

the  araount  of  the  country  notes,  seem  sufficiently  to  explain  the  larger 
quantity  of  bank  notes.  The  total  reserve  of  bullion  in  the  Bank  of 
England  was  nineteen  and  a  half  millions  on  the  average  of  January, 
1853,  and  fifteen  and  a  half  millions  on  the  average  of  December,  1853 
a  decline  of  four  millions.  The  decline,  however,  occurred  after  July, 
and  the  drain  was  heaviest  in  September,  October  and  November.  It 
happened  most  fortunately,  that  during  those  three  months  the  arrivals  of 
gold  from  Australia  and  elsewhere  were  large  and  frequent,  and,  beyond 
doubt,  the  appearance  of  such  supplies  at  so  timely  a  juncture,  greatly  di- 
minished alarm. 

The  years  1852  and  1853  had  afforded  a  rich  harvest  to  almost  every 
class  of  persons  connected  with  ships.  The  enormous  emigration  of 
1852,  and  the  enormous  imports  and  exports  of  1853,  created  a  sudden 
and  large  demand  for  freight,  far  beyond  the  resour^s  of  the  vessels 
really  available. 

Thus,  in  1853,  the  aggregate  of  the  London  imports  of  timber  have  ex- 
ceeded by  33  per  cent,  the  corresponding  importation  of  1852  ;  but  the 
larger  aggregate  supply,  finding  its  approximate  consumption,  has  not 
added  to  the  aggregate  stocks  of  timber  in  hand  in  the  United  Kingdom. 

The  importation  of  timber  into  London  has  employed,  since  1850,  the 
following  quantity  of  shipping,*  viz.  : 

Year.  Ships.  Tonnage. 

1853, 1,853          574,000 

1852, 1,419          432,000 

1851, ■ 1,457          456,000 

1850, 951          309,000 

The  years  1852  and  1853  were  a  period  of  great  activity,  and  gene- 
rally of  great  prosperity.  The  demand  for  labor,  for  manufactured  goods, 
for  shipping,  and  for  the  infinite  varieties  of  commodities  absorbed  by  the 
enormous  export  trade  to  Australia  and  California,  produced  marked 
effects  on  prices  and  the  general  condition  of  the  country,  effects,  how- 
ever, which  were  extensively  modified  by  the  bad  harvest  of  1853,  and 
the  prospect  of  the  Russian  war,  then  become  imminent. 

The  Year  1854. 

The  year  1854  was  distinguished  by  a  state  of  things  in  nearly  all 
respects  the  reverse  of  1853.  In  1854,  the  year  opened  with  the  preva- 
lence among  the  public  of  feelings  of  uncertainty  and  distrust,  excited  by 
the  near  approach  of  an  European  war.  The  bad  harvest  of  1853  had 
raised  the  prices  of  corn  to  a  scarcity  point,  and  there  was  a  manifest 
pause  in  the  career  of  prosperous  trade  which  had  marked  the  early 
months  of  1853. 

As  the  year  proceeded,  the  sources  of  difficulty  increased.  The  stop- 
page of  trade  with  Russia  raised  the  price  of  several  important  raw  ma- 


*  Churchill's  London  Circular  of  December  31,  1853;  Tooke's  History  of  Prices, 
vol.  V.  p.  228. 


412  History  of  the  Bank  of  England. 

terials  of  manufacture.  The  reports  of  the  Australian  market  became 
worse  and  worse,  and  led  to  extensive  and  serious  failures  on  this  side. 
In  the  summer  similar  difficulties  occurred  in  the  trade  with  the  United 
States,  and  for  a  considerable  period  a  severe  commercial  crisis  prevailed 
at  New-York  and  other  leading  American  cities,  the  origin  of  which  was 
OVER-TRADING  to  California,  and  over-investments  in  railways  and  land.f 

In  the  autumn  occurred  the  failures  in  the  shipping  trade.  The  supply 
of  new  ships  had  at  length  not  only  overtaken  but  exceeded  the  demand. 
The  landing  of  the  army  in  the  Crimea  had  abated  the  first  great  pres- 
sure of  the  government  for  transports  ;  the  cessation  to  a  great  extent  of 
the  exports  to  Australia  had  cut  off  one  of  the  principal  channels  of  em- 
ployment ;  and  there  was  a  sudden  and  severe  revolution  in  the  value  of 
shipping  property,  a  revolution  which  produced  failures  and  discredit. 

As  regarded  the  great  staple  manufactures  of  cotton  and  woolens,  there 
■was  throughout  tPife  year  a  strong  and  constant  tendency  to  check  the  ad- 
vance in  prices  and  wages  which  had  taken  place  in  1852  and  1853. 

The  large  additions  to  factory  power,  made  in  those  years,  produced 
their  natural  result  in  1854,  in  a  rapid  increase  of  production,  and  the 
demand  having  materially  lessened,  there  was  a  constant  tendency  in 
1854  to  work  short  time,  and  arrive  in  various  ways  at  a  reduction  of 
wages. 

At  the  opening  of  the  year  the  Bank  of  England  minimum  rate  was 
five  per  cent.,  as  fixed  on  29th  September,  1853.  The  total  bullion  was 
fifteen  and  a  half,  and  the  private  securities  fourteen  and  a  half  millions. 

The  minimum  rate  was  raised  to  five  and  a  half  per  cent,  on  the  11th 
May,  1854,  and  at  that  time  the  total  bullion  had  fallen  to  twelve  millions ; 
but  beyond  the  rise  of  the  half  per  cent,  there  was  no  unfavorable  change 
in  the  money  market.  On  the  contrary,  it  was  a  topic  of  observation, 
that  the  actual  commencement  of  the  war  had  caused  scarcely  any  dis- 
turbance. 

The  minimum  rate  was  again  lowered  to  five  per  cent,  on  the  27th 
July,  and  remained  at  that  figure  till  April,  1855. 

It  can  hardly  admit  of  a  question  that  the  influx  of  gold  from  Austra- 
lia saved*  England  from  extreme  commercial  pressure  during  the  close  of 
1853,  and  early  months  of  1854.f 

At  the  end  of  October,  1853,  the  total  reserve  of  bullion  in  the  Bank 
of  England  was  about  fifteen  millions.  In  the  middle  of  April,  1854,  it 
was  barely  fourteen  millions,  and  in  the  interval  of  five  months  the  arri- 
vals of  gold  and  silver  from  Australia,  America  and  other  quarters,  have 
been  equal  to  more  than  ten  millions.  The  amount  of  the  banking 
reserve  at  the  end  of  October,  1853,  was  about  six,  the  securities  twenty- 
eight  and  the  circulation  twenty-four  and  a  half  millions.  These  figures 
were  not  materially  different  in  April,  1854.  The  reserve  stood  at  six,  the 
securities  at  twenty-nine,  and  the  circulation  at  twenty-three  and  a  half 
millions.     The  extra  million  of  securities  had  been  half  derived  frorci  the 


*  But  continued  to  give  an  undue  impetus  to  trade,  domestic  and  foreign. — Am. 
Ed. 

f  Tooke's  History  of  Prices,  vol.  v.  p.  309,  <fec. 


Events  of  the  Year  1854.  413 

circulation  and  half  from  the  deposits.  But  if  there  had  been  no  arrival 
of  ten  millions  of  new  gold  in  the  interval,  what  would  have  been  the  situ- 
ation in  April  ?  As  the  facts  stood,  the  money  market  had  been  firm  and 
quiet.     The  rate  of  interest  had  remained  steadily  at  five  per  cent. 

Large  receipts  of  grain  from  the  United  States  were  reported  through- 
out the  year  1854.  But  in  former  periods  of  a  similar  character,  in  1846 
-47  for  example,  the  effect  of  a  large  and  sudden  demand  for  American 
grain  was  very  different.  Then  the  excess  of  importations  was  on  the 
side  of  England,  and  the  money  market  here  was  deranged  by  the  con- 
sequent efflux  of  gold.  It  would  have  been  so  again  during  1853-4,  if 
the  enormous  and  active  demand  for  imported  goods,  excited  in  America 
hy  the  influx  of  the  California  supplies,  had  not  acted  so  powerfully  on  the 
trade  between  the  two  countries  as  to  render  the  large  expoi'ts  of  grain  to 
England  no  more  than  a  corrective  of  the  previously  existing  adverse  state 
of  the  exchange  as  concerned  America.  The  money  market  remained  in  a 
quiet  and  sound  condition  throughout  the  summer.* 

There  had  been  a  recovery  of  six  or  seven  per  cent,  in  the  price  of 
consols  even  so  early  as  June ;  and  about  the  same  time  it  appeared  that 
the  rate  of  interest  at  Paris,  Hamburg  and  Amsterdam  was  not  only  as 
free  from  excessive  elevation  as  in  London,  but  was  very  considerably 
lower,  and  comments  were  very  general  on  the  apparent  anomaly  of  dif- 
ferences in  the  rate  of  interest  so  great  in  places  so  near  to  each  other, 
and  so  intimately  connected  for  trading  purposes. 

To  refer  to  the  rate  of  interest  on  the  continent.  It  was  stated  that  in 
Amsterdam  the  rate  of  discount  was  two  per  cent.,  in  Hamburgh  three 
to  three  and  a  half,  and  in  Paris  four  per  cent.  In  London,  the  minimum 
rate  of  discount  at  the  Bank  of  England  was  five  and  a  half  per  cent., 
and  out  of  doors  the  rates  were,  on  the  whole,  even  less  favorable  to  bor- 
rowers. In  New- York,  Boston  and  Philadelphia,  the  rate  of  interest  had 
been  for  some  time  ten  to  twelve  per  cent,  per  annum. 

The  failures  consequent  on  the  crisis  in  America  and  the  glut  in  Aus- 
tralia, did  not  occur  to  any  serious  extent  earlier  than  July.  The  greatest 
failure  of  all,  namely,  that  of  Mr.  Oliver,  of  Liverpool,  who,  in  the  course 
of  a  short  time,  had  become  the  registered  owner  of  a  very  large  fleet  of 
vessels,  did  not  occur  till  October. 

In  the  United  States  the  month  of  July  r/as  rendered  memorable  by  the 
discovery  of  the  forgeries  of  Robert  Schuyler,  who  had  availed  himself  of 
his  position  as  president  of  certain  leading  American  railways  to  issue 
forged  securities  of  the  several  companies,  to  the  extent  of  nearly  a 
million  sterling.  The  failures  and  discredit  in  various  parts  of  the  Union 
were  excessive,  and  a  large  number  of  banks  were  swept  away.  In  San 
Francisco,  about  the  end  of  the  year,  there  was  something  very  like  a 
general  suspension  of  payments.* 

The  following  table  will  show  the  remarkable  changes  in  the  rates  of 
freight  paid  in  London  to  places  as  under,  during  the  months  of  January, 
April,  July  and  October,  1852-56  : 


*Tookb'8  History  of  Prices,  vol.  v.  p.  318. 

27 


414 


History  of  the  Bank  of  England. 


To  Nbw-Tobk.  Calcutta.  Mklboubnb. 

Meamirement  Meature-  Liquids 

Goodt,  merit,  in  Bulk, 

Datet.  Per  Ton.  Per  Ton.  Per  Ton.         Per  Ton. 

1852.  »•    <i-  »•  «•  '• 

January, IB 22  ....  42  ....  52 

AprU,. 12  6    ....  22  ....  47  ....  65 

July, 10 22  ....  50  ....  JO 

October, 12  6    ....  25  ....  60  ....  16 

1853. 

January, 20 30  ....  80  ....  110 

AprU. 22  6         ....  35  ....  80  ....  95 

July 28 42  ....  85  ....  95 

October, 20 45  ....  10  ....  85 

1854. 

January, .' 20 47  ....  90  ....  UO 

April,. 22    6         ....  50  ....  85  ....  HO 

J,5y, 27     6         ....  42  ....  65  ....  90 

October, 20 35  ....  65  ....  85 

1856. 

January, 12  6    ....  25  ....  45  ....  60 

AprU,. 10 22  ....  50  ....  65 

July, 10 20  ....  45  ....  65 

October, 10 20  ....  37  ....  60 

1856. 

January, 10 25  40  55 

AprU, 12     6         ...;  18  37  60 

July, 10 18  37  ....  50 

October, 9 20  ....  37  47 

During  the  year  1854  vessels  rose  to  a  higher  price  than  they  had  ever 
been  since  the  last  war,  and,  in  some  instances,  ships  which  four  years  ago 
could  have  been  bought  for  £15  to  £16  per  ton,  freely  sold  for  £26  to 
£27,  and  some  cases,  £28  per  ton  register. 

This  arose  entirely  from  the  sudden  demand  for  A 1  vessels,  suitable  for 
the  transport  service  when  war  was  declared  against  Eussia.  At  that  time, 
(March,  1854,)  the  government  were  paying  33s.  to  355.  per  register 
ton  per  month  for  sailing  vessels ;  and  even  at  these  rates  sufficient  could 
not  be  found  to  meet  the  emergency.  No  sooner  had  the  army  embarked 
than  the  demand  ceased,  and  in  less  than  two  months  afterwards  similar 
ships  could  easily  be  procured  at  the  reduced  rate  of  205.  per  register 
ton  per  month.  At  that  rate  far  more  ships  were  offering  than  could  find 
employment. 

The  blockade  of  the  Russian  ports  materially  stopped  the  supply  of 
Baltic  timber.  This  led  to  orders  to  America  to  engage,  even  at  most 
extravagant  rates,  American  vessels  to  load  in  the  St.  Lawrence  with  tim- 
ber and  deals  for  England,  and  these  cargoes  were,  many  of  them,  sold 
when  they  arrived  at  prices  which  barely  paid  freight  and  charges.* 

In  April,  1851,  Mr.  Thomson  Hankey,  Jr.,  who  had  been  elected  one 


•  TooE£'3  History  of  Prices,  vol.  v.  p.  320. 


Events  of  the  Years  1851-1854.  415 

of  the  directors  of  the  bank  in  1835,  succeeded  Mr.  Henry  James  Pres- 
COTT  as  governor.  Mr.  John  Gellibrand  Hubbard,  who  was  first  elected 
a  director  in  1838,  become  deputy-governor  in  the  year  1851.  Both 
these  gentlemen  were  re-elected  in  1852.  In  1853,  Mr.  Hubbard  was 
chosen  governor  and  Mr.  Thomas  Matthias  Weguehn  became  deputy- 
governor,  both  for  two  years. 

1851-1854. 

The  following  were  the  leading  commercial  and  financial  events  of  the 
years  1851-1854: 

1851. — Gold  discovered  in  large  quantities  in  Australia.  Gold  fields 
proclaimed  as  belonging  to  the  crown.  Chamber  of  Commerce,  Mel- 
bourne, established.  The  London  exhibition  opened.  May  1.  Contract 
of  Pacha  of  Egypt  with  Mr.  Stephenson  for  a  rail-road  from  Alexandria 
to  Cairo.  Railways  completed  between  St.  Petersburgh  and  Moscow, 
Dublin  and  Galway.  Collins'  steamer  Pacific  arrived  in  Liverpool, 
May.  Yacht  America  won  the  race  at  Cowes,  2  2d  August.  Hudson  River 
Rail-Road  opened  to  Albany,  8th  October.  Dr.  Kane  returned  from 
the  Grinnell  expedition,  October. 

1852, — Construction  of  French  Crystal  Palace  ordered,  February. 
Telegraph  communication  between  London  and  Paris,  November  1. 
Great  free  trade  banquet  at  Manchester.  Expedition  of  United  States 
naval  forces  to  Japan,  March.  Dr.  Rae  returned  from  his  search  for  Sir 
John  Franklin,  February.  Ship  Prince  Albert  returned  from  search  for 
Sir  John  Franklin,  Vth  October. 

1853. — Trial  trip  of  the  caloric  steamship  Ericsson  from  New- York  to 
the  Potomac,  11th  January.  Second  Arctic  expedition  left  New-York, 
31st  May.  American  expedition  arrived  at  Japan,  8th  July.  Loss  of 
the  steamship  Humboldt,  5th  December.  Cochin-China  fowl  mania  in 
London.  Discovery  of  the  northwest  passage,  by  Capt.  McClure,  R. 
N.  War  between  Russia  and  Turkey.  Shanghai  taken  by  the  rebels, 
September  7. 

1854. — Combined  fleets  of  England  and  France  entered  the  Black  Sea, 
11th  January.  Dr.  Bowring  appointed  British  Commissioner  of  Trade 
in  China.  Loss  of  the  steamer  San  Francisco,  5th  January.  Steamer 
City  of  Glasgow  lost,  March.  DecJaration  of  war  by  England  against 
Russia  in  behalf  of  Turkey,  28th  March.  Treaty  of  alliance  between  Eng- 
land, France  and  Turkey,  March.  Commercial  treaty  between  United 
States  and  Japan.  Reciprocity  treaty  between  England  and  United  States, 
June  7.  French  loan  of  250,000,000  francs,  announced  March  11,  and 
the  Turkish  loan  of  £2,727,400.  Distillation  from  cereals  prohibited  in 
France.  London  joint-stock  bankers  admitted  to  the  clearing-house, 
June  7.  Crystal  Palace  at  Sydenham  opened  10th  June.  Bombard- 
ment of  San  Juan  by  ship  Cyane,  13th  July.  Loss  of  steamer  Arctic, 
27th  September.  Captain  McClure  returns  from  Arctic  discovery,  28th 
September. 


416  History  of  the  Bank  of  England. 

CHAPTER   VI. 
The  Years  1855-1856. 

THB     TEAR    1855 GREAT     GLOOM     PREVAILING WAR    WITH    RUSSIA    CONTINUED REDUC- 
TION IN  FREIGHTS,    AND    IN    SHIP-BUILDING IMPORTS  OF    COLONIAL  TIMBER BANK    RATE 

OF   DISCOUNT    5    PER    CENT.    FOR   TWENTY-TWO   MONTHS REDUCED   TO   4^, 

The  Year  1855. 

In  the  course  of  1855  the  causes  of  depression  which  had  been  in  op- 
eration in  1854  were  still  active,  but  the  difficulties  did  not  prove  by 
any  means  so  severe.  The  year  opened  amidst  great  gloom.  The  pub- 
lic were  beginning  to  understand  the  lamentable  and  critical  condition  of 
the  army  in  the  Crimea,  and  the  prospects  of  the  new  campaign  were  of 
the  most  cheerless  character.  The  price  of  grain  was  still  high,  notwith- 
standing the  abundant  crop  of  1854.  The  heavy  additional  taxes  occa- 
sioned by  the  war  were  severely  felt  by  large  classes  of  persons.  Butch- 
er's meat  was  very  dear.  The  commercial  collapse  in  the  United  >States, 
the  discredit  in  Australia,  the  civil  war  in  China,  and  the  unsettled  state 
of  Europe,  all  interfered  with  the  progress  of  ^trade,  particularly  the  ex- 
ternal trade. 

The  bank  minimum  rate  of  discount  remainedat  5  per  cent,  (as  fixed 
on  the  27th  July,  1853)  till  5th  April,  1855.  It  was  then  reduced  to 
4^  per  cent.  On  the  3d  May  it  was  further  reduced  to  4,  and  on  the 
14th  June  still  further  reduced  to  3^  per  cent.  With  September  began, 
on  the  part  of  the  Bank  of  England,  with  a  vieiv  to  retrieve  the  evils  ai'is- 
ingout  of  these  rapid  reductions,  the  series  of  measures  which  constituted 
the  financial  pressure  of  the  close  of  the  year.  From  4  per  cent.,  as  fixed 
on  the  4th  September,  the  minimum  rate  was  run  up  to  6  and  7  per  cent, 
by  the  iVth  October.* 

In  the  shipping  trade  of  the  year  1855  there  has  been  less  fluctuation 
in  freights  than  might  have  been  expected  during  a  period  of  war. 
There  has  been,  in  fact,  much  less  fluctuation,  and  a  more  steady  demand 
for  vessels,  than  we  have  found  in  years  of  peace.  Trade  has  been  more 
limited,  and  tonnage  has  been  ample  to  meet  its  requirements.  Freights 
have  consequently  ruled  lower  than  in  1853  and  1854. 

The  following  table*  will  show  the  average  rates  at  which  vessels  were 
engaged  in  England  in  1853  and  1854  : 

1853.  1854. 

Destination.  «.  s. 

Bombay,  (general  cargo,) 41 

Calcutta,  "  44 

Hong  Kong,         "  66 

Sydney,  "  80 

Port  Philip,  "  83 

Odessa,  "  86 

*  Tooke's  Eittory  of  Prices,  vol.  v.  p.  830. 


30 

per 

ton  register. 

29 

51 

68 

66 

104 

Merits  of  the  Year  1856.  417 

As  regards  the  extent  of  ship-building  on  the  Clyde,  a  Glasgow  circu- 
lar gives  the  following  figures*  of  iron  steamships  built  and  building  at 
31st  December  of  each  of  the  years  1853-1855  : 

Launched  in  Year. 

Tear.  2^o.  Tonnage. 

1855, 101  85,000             

1854, 129  "70,000             

1853, 79  65,000             

From  the  official  returns  we  can  compute  the  importation  and  home 
consumption  of  timber  in  the  United  Kingdom,  as  follows,  viz. : 

1852.  1853.  1854.  1855. 

Imported.  Loads.  Loads.  Loads.  Loads. 

Colonialtimber,  deals,  etc., 1,151,000  ..   1,200,000  ..  1,440,000  ..      948,000 

Foreign  "  891,000  . .   1,326,000  . .  1,050,000  . .      85'7,000 


Building  8Ut  Dec. 

2^0. 

Tonnage. 

61 

38,000 

54 

47,000 

91 

61,000 

Total  imports,            2,042,000  . .  2,526,000  . .  2,490,000  . .  1,805,000 

Consumption. 

Colonialtimber,  deals,  <fec„ 1,156,000  ..   1,219,000..  1,441,000  ..  947,000 

Foreign                 "                 945,000   . .   1,066,000  . .  1,162,000  . .  950,000 


Public 

Other 

Rate  of 

Securities. 

Securities. 

Bullion.    . 

Disc'nt. 

£13,026,749 

£13,655,995 

£15,078,818 

..  4X 

.  13,591,373 

..  12,721,050 

..  15,619,219 

..  4 

.  12,631,063 

..  12,399,704  , 

,.  18,060,716 

..  3X 

,.  13,031,088 

..  16,637,227 

..  14,217,375 

..  4 

.  12,799,363 

..  17,333,784  , 

..  13,698,455 

..  i}i 

.  12,125,026 

..  19,915,763 

..  12,938,928 

..  5 

.  11,413,043 

..  19,791,293 

..  12,279,281 

..  5X 

.  10,635,359 

..  18,789,512 

..  11,230,207 

..  e&T 

2,101,000   . .   2,285,000  . .  2,603,000   . .    1,897,000 

The  changes  in  the  condition  of  the  bank  in  the  year  1855  are  repre- 
sented in  the  following  summary  of  circulation,  deposits,  loans,  bullion 
reserve,  and  rate  of  discount : 

Public  Other 

1855.       Circulation.    Deposits.  Deposits. 

AprU  7,  £20,717,199    £6,008,895  £11,396,875 

May     5,..  21,258,966  ..  4,337,590  ..  12,645,651 

June  16,..  20,570,965  ..  5,536,754  ..  13,307,714 

Sept.    8,..  21,133,671  ..  7,591,337  ..  10,970,353 

"    15,..  20,703,610  ..  7,833,531  ..  11,146,762 

"    29,..  21,174,423  ..  8,144,209  ..  11,437,955 

Oct.     6,..  21,304,102  ..  7,106,524  ..  10,837,643 

"    20,..  21,351,884  ..  3,825,021  ..  11,764,080 

The  Yeae  1856. 

Early  in  January,  1856,  the  rumors  of  approaching  peace  were  fully 
confirmed.  The  disposition  on  the  part  of  Russia  to  seek  a  termination 
of  the  war  seemed  to  admit  of  no  question,  and  the  only  points  left  in 
suspense  were  the  details  of  the  treaty  to  be  framed  at  the  conferences  at 
Paris.  The  year,  therefore,  may  be  considered  as  having  proceeded  from 
the  first  upon  peace  anticipations.  The  Bank  of  England  minimum  rate 
remained  at  six  and  seven  per  cent.,  (as  fixed  on  l7th  October,  1855,)  until 
22d  May,  1856.  It  was  then  reduced  to  six  per  cent. ;  a  week  afterwards, 
29th  May,  to  five  per  cent.,  and  on  the  26th  June  to  four  and  a  half  per 
cent.*  On  the  1st  October  the  rate  was  raised  to  six,  and  on  the  6th  Oc- 
tober to  six  and  seven  per  cent.,  and  on  the  13th  November  to  seven  per 


*  Tooke's  History  of  Prices,  vol.  v.  p.  331. 


418  History  of  the  Bank  of  England. 

cent,  on  all  classes  of  bills.     The  following  were  the  changes  in  the  items 
of  loans,  deposits,  bullion,  &c.,  during  the  year  1856  : 


Circula- 

Public 

Other 

PuUic 

Other 

Rate  of 

Date. 

tion. 

Deposits. 

Deposits. 

Securities. 

^Securities. 

Bullion. 

DiscH. 

1856. 

Per  ct. 

May  24,. 

£20,074,819 

£8,535,203 

£11,472,481 

£12,479,416 

£15,377,046 

£10,558,804 

..  6 

"      81,, 

.     20,328,208 

..  3,686,524 

..  10,745,271 

..  12,612,119 

..  14,042,418 

..  11,884,656 

..  5 

June,  28, 

.     20,312,801 

..  5,704,570 

. .    9,810,045 

..  11,276,155  , 

..  14,803,958  , 

..  13,073,758 

..  4>^ 

Sept.  27,, 

.     21,151,629 

..  8,409,851 

..    9,956,813 

..  11,964,953 

..  19,616,384 

..  11,769,872 

..  5 

Oct.    11,, 

.     21,501,201 

..  8,001,501 

. .     9,848,912 

..  11,378,905 

..  21,049,117 

..  10,140,067 

..  6&7 

Nov.  15,, 

.     20,825,251 

..  4,924,785 

..  10,113,368 

..  10,457,869 

..  19,054,017  , 

..     9,684,167 

..  7 

Dec.     6, . 

,     20,055,142 

..  5,870,709 

. .     9,297,193 

..  10,640,867 

..  17,389,715 

..  10,486,198 

..  6>tf 

"      20,. 

19,335,282 

..  6,891,949 

. .     9,493,093 

..  10,870,431  . 

,.  17,654,460  , 

,.  10,513,823 

..  6 

The  Bank  of  England  has  eleven  branches,  viz.,  Manchester,  Swansea, 
Birmingham,  Liverpool,  Bristol,  Leeds,  Newcastle,  Hull,  Plymouth,  Ports- 
mouth and  Leicester.  All  these  branches  issue  notes  of  their  own,  and 
it  is  understood  that  the  proportion  of  the  whole  of  the  Bank  of  England 
circulation,  as  between  the  bank  in  London  and  the  branches,  is  that  two- 
thirds  are  issued  from  London,  and  one-third  from  the  branches.  Thus,  out 
of  a  circulation  of  £21,000,000,  the  London  notes  would  be  £14,000,000 
and  the  branch  bank  notes,  £7,000,000.  The  notes  of  each  branch  only 
are  payable  in  coin  at  the  branch  from  which  they  are  issued ;  but  the 
whole,  town  and  country  notes  equally,  are  payable  in  coin  at  the  bank  in 
London.  Otherwise  Bank  of  England  notes  are  a  legal  tender  in  Eng- 
land, but  not  in  Scotland  or  Ireland — provisions  having  been  inserted  in 
the  acts  of  1844-5  to  make  that  clear. 

We  cannot  conclude  these  observations  without  calling  attention  to 
what  must  be  regarded  as  a  very  striking  and  significant  feature,  and  which 
is  indicated  by  these  returns,  and  the  importance  of  which  will  be  more 
plain  when  taken  in  connection  with  the  foregoing  observations.  It  is  the 
amount  of  bullion  held  by  the  Bank  of  England.  It  will  be  seen  that  in 
no  year  since  1842  up  to  1856,  not  even  excepting  1847,  has  the  bullion 
stood  so  uniformly  low  throughout  the  year  as  in  1856 — and  that  not- 
withstanding the  large  importations  during  the  year.* 

At  this  time  a  singular  fraud  was  discovered  in  France.  The  person 
who  had  the  collection  of  the  rents  of  the  houses  and  apartments  in  the 
Passage  de  la  Marmite,  in  the  quartier  St.  Martin,  which  belongs  to  the 
Administration  des  Hospices,  in  paying  in  the  money  which  he  had  re- 
ceived at  the  central  office,  discovered  a  forged  bank  note  of  lOOf.  This 
note,  which  at  the  first  glance  appears  to  have  been  admirably  done,  was 
executed  entirely  with  the  pen.  It  was  thought  it  must  have  been  the 
work  of  a  foreigner,  as  there  were  several  orthographical  errors,  sufficient 
to  cause  the  fraud  to  be  detected.  These  errors  might  be  seen  in  the 
words  written  in  the  small  escutcheons  on  either  side  of  the  note.  The 
water-mark,  too,  had  been  managed  in  such  an  ingenious  way  as  to  de- 
ceive the  eye  of  an  ordinary  observer.  The  time  occupied  by  the  person 
who  had  executed  the  note  must  have  been  worth  infinitely  more  than 


•  London  Economist. 


Events  of  the  Year  1856.  419 

lOOf.,  which  it  represented.     An  inquiry  was  instituted  by  the  commissa- 
ry of  police,  with  what  result  is  not  known. 

Mr.  TooKE,  an  English  writer  of  celebrity,  has  lately  added  two  vol- 
umes on  the  prices  of  1848-1856.  From  these  volumes  we  extract  the 
following  summary  of  conclusions  with  reference  to  the  prices  of  commod- 
ities and  state  of  trade  in  1848-1856 : 

"  Without  attempting  to  include  in  a  summary  of  conclusions  all  the 
inferences  which  arise  from  the  survey  and  narrative  now  concluded,  as 
to  the  changes  since  the  discovery  of  gold  in  California,  I  present  the 
following  statements  as  setting  forth  those  results  which  are  best  estab- 
lished and  most  important,  viz. : 

"  That,  as  regards  the  great  articles  of  import,  such  as  colonial  and 
tropical  produce,  and  commodities  largely  employed  in  this  country  as 
raw  materials  of  manufacture,  the  course  of  prices  during  the  nine  years, 
1848-1856,  may  be  described,  in  general  terms,  as  follows,  viz. :  During 
1848  and  1849  there  was  a  general,  and,  in  several  important  instances,  a 
strong  tendency  to  lower  prices  ;  that  in  1850,  partly  in  consequence  of 
larger  consumption  and  partly  in  consequence  of  actual  or  apprehended 
failures  of  supply,  prices  sensibly,  and,  in  some  cases,  materially  ad- 
vanced;  that  in  1851  there  was  again  an  extensive  and  severe  decline, 
attributable  almost  wholly  to  excess  of  supply ;  that  in  1 852  there  was 
a  manifest  tendency  towards  recovery ;  that  in  the  first  nine  months  of 
1853  the  upward  tendency  of  the  previous  year  reached  its  highest  point, 
establishing  and  maintaining  for  nine  months  a  range  of  prices  considera- 
bly higher  than  had  prevailed  for  a  long  period ;  that,  from  the  autumn  of 
1853  to  the  close  of  1854,  there  was  a  sensible  reaction  from  the  previous 
high  rates,  except  as  regards  some  of  the  articles  immediately  affected  by 
operations,  or  the  commissariat  consumption  of  the  war;  and  that  in  1855 
and  1856  the  markets  were  quiet  and  firm,  exhibiting  only  such  fluctua- 
tions as  arose  out  of  ordinary  changes  in  supply  and  demand.  In  a  fu- 
ture part  (VII.)  I  shall  inquire  how  far  the  fluctuations  of  prices  now  re- 
ferred to  were  connected  with  the  influx  of  the  new  gold. 

"That  the  first  effects  of  the  California  discoveries  of  1848  were  felt  in 
this  country  in  1850  and  1851,  and  manifested  themselves  in  the  in- 
creased demand  for  British  and  foreign  articles  suitable  for  the  export  trade 
to  the  United  States;  that  the  same  effects  were  still  more  sensibly  felt  in 
the  course  of  1852  ;  that  in  1853  the  consumption  of  British  goods  in 
California  and  the  United  States  generally  had  become  so  large  and 
rapid,  as  to  counteract  almost  entirely,  as  regards  this  country,  any  preju- 
dicial effect  upon  the  balance  of  trade  of  the  vast  imports  of  grain,  ren- 
dered necessary  by  the  serious  failure  in  these  islands  of  the  harvest  of 
1853  ;  that  the  same  large  American  demand  for  British  exports  contin- 
ued through  1854  and  1855,  and  had  prevailed  through  1856,  interrupt- 
ed but  casually  by  the  extensive  failures  and  discredit  which  prevailed  in 
the  United  States  and  California  during  portions  of  the  years  1854  and 
1855  ;  and  that,  as  the  general  result  of  the  trade  between  this  country 
and  the  United  States  since  1850,  the  absorption  of  British  exports, 
either  in  California  itself,  or  in  those  regions  of  the  North  American 
continent  to  which  the  supplies  of  California  gold  are  chiefly  sent  in 
the  first  instance,  has  increased  so  rapidly  as  to  render  necessary  a  con- 


420  History  of  the  Bank  of  England. 

stant  and  large  transmission  of  the  precious  metals  from  America  to  this 
country. 

"That  the  effects  of  the  Australian  discoveries  of  the  summer  of  1851 
were  felt  in  this  country  in  a  striking  manner  early  in  the  following 
year,  (1852,)  manifesting  themselves  in  a  sudden  and  large  expansion  of 
the  stream  of  emigration  from  these  islands,  and  in  a  sudden  and  large 
expansion  in  the  shipment  of  nearly  all  descriptions  of  commodities ; 
that  the  demand  for  ships  hence  arising  could  not,  in  the  then  condition 
of  the  mercantile  marine,  be  readily  supplied ;  and  the  consequence  was 
an  enormous  increase  of  the  rates  of  freight,  and  a  demand  for  new  ships 
so  urgent,  that  considerably  higher  wages  were  at  once  conceded  in  all 
the  ship-building  trades ;  that  the  same  urgent  demands  for  Australia 
continued  in  the  early  part  of  1853,  were  considerably  moderated  in 
1854,  still  more  reduced  in  1855,  but  in  1856  were  again  marked  by 
considerable  activity. 

''  That  the  movement  for  higher  wages  successfully  commenced  in  the 
autumn  of  1852 ;  in  the  ship-building  trades  became  almost  universal  in 
the  first  half  of  1853;  and  previous  to  September,  in  that  year,  had  led 
to  a  very  general  addition  of  from  12  to  20  per  cent,  to  the  wages 
current  in  1851 ;  but  that  the  effect  of  the  bad  harvest  of  1853,  the  war  of 
1854-'55,  and  the  glut  of  the  Australian  markets,  was  to  produce  a  con- 
siderable reaction  from  this  advance,  especially  in  the  factory  districts. 

"  That  the  first  and  immediate  effect  of  the  high  prices  of  colonial  and 
other  imported  articles  in  1852  and  1853,  and  of  the  high  prices  and 
large  demand  for  manufactured  goods  in  the  same  years,  was  to  occa- 
sion vigorous  efforts  and  a  large  expenditure  of  capital,  with  a  view  to 
opening  up  new  fields  of  supply,  and  creating  extended  means  of  produc- 
tion ;  and  that  it  is  principally  to  the  operation  of  these  causes  that  the 
steady  and  frequently  declining  course  of  prices  since  1853  is  to  be  at- 
tributed. 

"  That,  as  far  as  trustworthy  evidence  can  be  obtained,  there  are  no 
facts  in  the  experience  of  the  last  nine  years  which  justify  the  conclusion 
that  in  this  country  the  fluctuation  of  prices,  the  course  of  trade,  or  the 
increased  demand  for  goods  arising  out  of  the  large  exports  to  America 
and  Australia,  were  immediately  preceded  by,  or  connected  with 
changes  in  the  amount  of  the  aggregate  outstanding  circulation  of  bank 
notes.  In  other  words,  all  the  evidence  available  to  us  points  distinctly 
and  uniformly  to  the  conclusion  that  the  fluctuations  of  the  bank  note 
circulation  were  determined  and  regulated  by  the  consequences  flowing 
from  previous  applications  of  capital  and  credit  in  particular  modes. 

"  That,  further,  in  a  great  number  of  specific  instances,  it  can  be  shown 
conclusively  that  fluctuations  of  price  of  the  most  important  kind,  and  in 
the  largest  markets  of  the  country,  took  place  either  without  the  occur- 
rence of  any  change  whatever  in  the  bank  note  circulation,  or  contempo- 
raneously with  the  occurrence  of  a  change  the  precise  opposite  of  that 
which,  on  a  priori  grounds,  or  on  the  grounds  on  which  the  currency 
theory  is  built,  would  have  been  expected  to  precede  or  accompany  the 
particular  alteration  in  the  markets. 

"  That  neither  is  there  any  such  coincidence  between  variations  in  the 
rate  of  interest  and  variations  in  the  markets  for  produce,  as  to  justify 


Events  of  the  Year  1856.  421 

the  inference  of  a  direct  connection  between  them  in  the  relation  of 
cause  and  effect.  That  the  first  effect  of  the  gold  discoveries  on  the 
financial  condition  of  this  country  was  the  remarkable  and  prolonged  de- 
pression in  the  rates  of  interest  and  discount  which  prevailed  daring  the 
twelvemonth  preceding  the  spring  of  1853  ;  that  this  effect  on  the  rate  of 
interest  was  the  immediate  consequence  of  an  excessive  accumulation, 
principally  in  the  Bank  of  England,  of  the  early  remittances  from  Califor- 
nia and  Australia ;  and  that  the  influence  produced  by  these  accumula- 
tions on  opinion  and  credit  was  greatly  extended  and  aggravated  by  the 
maintenance  at  the  Bank  of  England  of  a  rate  of  discount  so  low  as  2  per 
cent,  from  April,  1852,  to  January,  1853. 

"  That  the  rise  of  the  rate  of  discount  which  commenced  in  January, 
1853,  and  has  been  maintained  during  the  subsequent  three  years,  is  to 
be  traced  in  its  origin  and  continuance  to  extended  demand  for  capital 
for  the  purpose  of  new,  distant  and  costly  enterprises,  directed  either  to 
the  construction  of  public  works,  to  the  extension  of  old  and  introduc- 
tion of  new  processes,  or  to  the  exploration  of  new  fields  for  the  supply 
of  commodities;  and  that,  so  far  as  we  can  judge  from  recent  experience, 
the  absorption  of  capital  for  these  and  other  objects  becomes  more 
rapid  and  extensive  with  every  year. 

"  That  the  interruption  to  the  trade  of  the  country  occasioned  by  the 
Russian  war  of  1854-5,  was  comparatively  slight,  and  for  five  reasons, 
viz. :  1.  Because  the  theatre  of  war  was  in  a  remote  part  of  the  east  of 
Europe ;  2.  Because  the  enemy  had  practically  no  navy  that  could  mo- 
lest our  commerce;  4.  Because  the  raw  materials  previously  obtained 
from  Russia  still  continued  to  arrive  through  neutral  ports,  or  were 
readily  replaced  by  imports  from  India  and  elsewhere ;  and,  5,  lastly.  Be- 
cause the  invention  of  the  telegraph,  the  existence  of  steam,  and  the 
enormous  resources  of  our  mercantile  marine  and  postal  services,  enable 
us  to  accomplish  in  a  few  weeks  operations  which,  at  the  commencement 
of  the  century,  would  have  occupied  a  long  series  of  months.  That  fur- 
ther, in  addition  to,  and  far  more  powerful  than  any  of  the  five  causes 
just  enumerated,  was  the  effect  of  the  continued  influx  of  gold  during 
1854  and  1855 — but  especially  during  the  latter  portion  of  1855,  in 
averting  from  this  country  and  from  France  the  extreme  financial 
pressure  and  peril  which,  in  the  absence  of  that  influx,  must  inevitably 
have  been  produced  by  the  necessity  of  providing  large  and  constant  re- 
mittances of  gold  to  the  seat  of  war;  and  must  inevitably  have  placed 
entirely  out  of  question  the  maintenance  of  the  restrictions  of  the  bank 
charter  act  of  1844,  and  perhaps  have  even  imperiled  the  maintenance  of 
the  act  of  1819. 

"  That  during  the  years  1848  and  1849,  and  part  of  1850,  the  losses 
and  discredit  which  fell  with  crushing  force  on  a  large  portion  of  the 
middle  classes  involved  in  the  railway  expenditure,  did,  beyond  question, 
produce  some  important  effect  in  limiting  the  consumption  of  commodi- 
ties. 

"  That,  on  the  other  hand,  it  was  a  direct  consequence  of  the  railway 
expenditure  of  the  years  1848,  1849  and  1850,  that  the  working  classes 
were  provided  with  fair  employment  during  a  period  of  interrupted 
trade;  and  it  was  also  a  direct  consequence  of  the  cheapness  of  food,  and 


422  History  of  the  Bank  of  England. 

the  low  range  of  general  prices  which  prevailed  to  the  year  1852,  that 
the  working  classes  were  able  to  command,  by  means  of  their  wages,  a 
larger  amount  of  sustenance  and  comfort  than  had  been  within  their 
reach  probably  at  any  former  period  of  the  century."* 

The  leading  commercial  and  financial  events  of  the  two  years,  1855— 
1856,  were  as  follows  : 

1855. — Discovery  of  Captain  Franklin's  remains.  £10,000  awarded 
Captain  McClure  by  Parliament.  Paris  exhibition  opened,  15th  May. 
Submarine  telegraph  wire  laid  in  Black  Sea.  Resistance  by  United 
States  to  the  payment  of  Sound  dues.  First  rail-road  train  crossed  the 
suspension  bridge  at  Niagara,  14th  March.  French  loan  of  500,000,000 
francs  taken,  18th  January.  Suspension  of  Page,  Bacon  &  Co.,  Adams 
&  Co.,  San  Francisco,  22d  February.  Failure  of  Strahan,  Paul  &  Bates, 
London,  June  16 — sentenced  to  14  years  transportation.  English  loan  of 
£16,000,000  taken  by  Rothschilds,  20th  April.  Ships  Arctic  and  Re- 
lease^ Capt.  Hartstein,  left  New- York  for  relief  of  Dr.  Kane  and  party. 

1856. — Russia  accepts,  unconditionally,  terms  of  peace,  January  17. 
The  steamer  Pacific,  Capt.  Asa  Eldridge,  23d  January,  leaves  Liverpool, 
and  is  not  again  heard  from.  Great  freshets  and  breaking  up  of  ice  in 
the  Ohio  and  Mississippi;  many  steamboats  destroyed,  23d  and  26th 
February.  Seizure  of  Nicaragua  transit  steamers,  by  Gen.  Walker,  Feb- 
ruary. Suicide  of  Sir  John  Sadlier,  February  1 6.  Preliminaries  of  peace 
signed  at  Paris,  March  1st.  Failure  of  the  Atlas  Marine  Insurance  Com- 
pany, New- York,  March  12th.  The  steamship  Adriatic  is  launched  at 
New-York,  Vth  April.  Denmark  proposes  to  commute  the  sound  dues, 
May.  Dismissal  of  Mr.  Crampton,  British  Minister  at  Washington,  May 
28th.  Inundations  in  France  cause  a  fall  of  three  per  cent,  in  French 
securities,  June.  Failure  of  Mr.  Henri  Place,  one  of  the  administrators 
of  the  Credit  Mohilier  ;  liabilities  eighteen  million  francs.  Decision  of 
the  New-York  Court  of  Appeals  in  favor  of  the  New-York  and  New-Ha- 
ven Rail-Road  Company,  June.  Honduras  Rail-Road  contemplated  by 
French  capitalists,  July.  Failure  of  the  Royal  British  Bank,  September. 
Failure  of  Palmer,  Cook  &  Co.,  San  Francisco,  and  of  the  State  of  Cal- 
ifornia to  pay  interest  at  New-York,  July.  A  formidable  insurrection 
breaks  out  at  Madrid,  Spain,  14th  July;  it  is  suppressed  in  Madrid  after 
a  bloody  contest  of  80  hours,  16th  July.  Canton  attacked  by  the  Eng- 
lish, 24th  October.  An  insurrectionary  movement  broke  out  in  Sicily, 
but  was  speedily  suppressed  by  the  military,  22d  November.  Failure  of 
Jacob  Little  &  Co.,  New-York,  December  5th.  Failure  of  Henshaw  & 
Son,  Boston,  bankers,  December.  Arrival  at  Spithead  of  the  "  Eesolute" 
Arctic  discovery-ship,  10th  December.  The  Arctic  discovery-ship  Beso- 
lute  was  delivered  to  the  British  authorities  at  Portsmouth,  30th  De- 
cember. 

Railway  expenditure  led  to  the  disaster  of  the  year  1857.  There  are 
three  periods  very  distinctly  marked  in  the  financial  history  of  that  ex- 
penditure, for  example  :f 

1,  To  the  three  excited  years,  1844,  1845  and  1846,  it  is  sufficient 
simply  to  refer.     They  were  a  period  of  extravagance  and  delusion. 

♦Tookk's  History  of  Prices,  vol.  v.  p.  369.      j;  Bankers'  Magazine,  N.  Y.,  1858-9. 


Events  of  the  Year  1856. 


423 


2.  The  next  four  years,  184Y,  1848,  1849  and  1850,  witnessed  the  ex- 
treme pressure  entailed  by  the  vast  schemes  of  the  previous  years. 

3.  With  1851  began  a  sensible  recovery.  The  crisis  had  been  passed, 
and  every  subsequent  year  has  contributed  to  improve  the  value  of  rail- 
way investments.* 

In  the  following  table  this  general  statement  is  illustrated  by  quota- 
tions of  the  price  of  stock  of  seven  of  the  leading  lines,  from  the  end  of 
1846  to  the  end  of  1851  : 


Prices  of  English  Eailway  Stock  (£100  paid  up) 

1846.     1847. 

Lines.  1  Jan.    1  Jan. 

London  and  N.  Western, 215 

Great  Western, 195 

South  Western, 150 

Midland, 150 

Brighton, 135 

South  Eastern, 120 

York  and  N.  Midland, 210 


ON  SEVEN  Leading  Lines,  1846-1850. 

1848.     1848.     1849.     1849.  1850. 

1  Jan.    1  July.  1  Jan.  1  May.  1  Jan. 


196 

.  150  . 

121 

.  125  . 

.  130  . 

.  109 

150 

.  105  . 

93 

.  93  . 

.  93  . 

58 

IVO 

.  120  . 

.  94 

..  80  . 

.  72  . 

61 

130 

.  107  . 

100 

.  85  . 

.  70  . 

45 

118 

.  82  . 

62 

.  62  . 

.  76  . 

80 

120 

.  90  . 

70 

.  72  . 

63  . 

57 

190 

. .  144  . 

.  140 

. .  110  . 

.  74  . 

.  34 

(£100 

PAID  UP,' 

1851- 

1856. 

1852. 

1853. 

1854. 

1855. 

1856. 

1856. 

1  Jan. 

1  Jan. 

IJan. 

1  Jan. 

1  Jan.  1 

Aug. 

118  . 

.   127  . 

102 

.   100  . 

94  . 

108 

86  . 

.  96  .. 

84  . 

.  70  . 

53  . 

65 

87  . 

.  92  .. 

77  . 

.  84  . 

86  . 

107 

57  . 

.  81  .. 

61 

.  70  . 

64  . 

85 

95 

.  109  . 

97 

.  107  . 

94  . 

107 

64  . 

.  84  .. 

60  . 

.  60  . 

58  . 

66 

44  . 

.  60  . 

47 

.  52  . 

45  . 

60 

1851. 

Lines.  1  Jan. 

London  and  N.  Western, 123  . 

Great  Western, 77  . 

South  Western, 66  . 

Midland, 47  . 

Brighton, 87  . 

South  Eastern, 66  . 

York  and  N".  Midland, 44  . 

Among  the  greatest  achievements  of  this  period  are  the  opening  up  of 
new  fields  of  supply,  and  the  deepening  of  old  channels  of  consumption. 
They  have  brought  into  profitable  use  mines,  forests,  quarries,  arable  and 
grazing  districts,  fisheries,  harbors  and  rivers  previously  inaccessible.  The 
produce  arising  from  these  various  and  numerous  sources  is  so  much  ad- 
ditional wealth  placed  at  the  command  of  the  community.*  But  still 
greater  even  than  these  achievements  are  the  advantages  arising  from  the 
cheap  and  rapid  conveyance  of  passengers  over  long  distances.  Every 
enterprise  is  now  carried  on  with,  perhaps,  ten  times  as  much  dispatch, 
and  with  ten  times  less  trouble  than  forty  years  ago  ;  and  the  facility  of  per- 
sonal superintendence  is  certainly  twenty  times  greater  than  it  was  then. 
It  is  not  difficult,  therefore,  to  comprehend,  that  to  accelerate  even  by  a 
few  years  the  completion  in  a  country  of  an  extensive  system  of  railways, 
is  to  confer  upon  it  advantages,  the  real  value  of  which  it  is  impossible  to 
represent  in  terms  of  money ;  and  we  shall  find,  in  the  considerations 
connected  with  this  mode  of  viewing  the  facts,  a  correction  of  many 
prevalent  errors  relative  to  the  cost  of  English  railways.  Let  us  see 
what  was  the  comparative  progress  which,  at  the  end  of  1854,  had  been 


•  Tooke's  History  of  Prices,  vol.  v.  pp.  360-364. 


424  History  of  the  Bank  of  England. 

made  by  the  countries  of  Central  and  Western  Europe,  and  by  the  United 
States,  in  providing  themselves  with  railways  : 

General  Summary  of  the  Comparative  Extent  of  Railway  open  at  the  close  o» 
1854,  IN  Different  Countries. 

Area  in  Miles  of  Railway       Miles  of  rail 

Eng.  Square  Miles.  open  in  1854.  open  to  each  100 

Country.  No.  No.  of  Miles.       Sq,  Miles  of  Area. 

England  and  Wales, 57,800         6,100         15.2 

Scotland, 30,240         1,040         3.5 

Ireland, 31,870         900         2.8 

119,910         8,040         6.7 

In  April,  1855,  Mr.  Thomas  Matthias  Weguelin,  who  had  been  elected 
a  director  in  the  year  1838,  and  deputy  governor  in  1853,  was  made  gov- 
ernor of  the  bank,  and  again  in  April,  1856,  Mr.  Sheffield  Neave  being 
deputy-governor  for  both  years.  The  extreme  views  of  writers  in  refer- 
ence to  the  charter  of  the  bank  are  in  part  indicated  by  the  following 
letter : 

The  Act  of  1844  a  Swindle. 

To  the  Editor  of  the  "  Money  Market  JReview.'" 

Sir, — Allow  me  to  call  the  attention  of  your  readers  to  the  fact,  that 
the  act  of  1844  operates  on  the  interests  of  both  employers  and  their 
workpeople  as  a  gigantic  swindle,  unintentionally,  uo  doubt,  but  never- 
theless it  is  a  fact.  The  act  alters  periodically  the  value  of  the  measure 
by  which  the  labor  of  the  operative  and  the  goods  of  the  employers  are 
measured,  producing  the  same  effect  as  if  false  weights  and  measures  were 
used  for  the  benefit  of  the  moneyed  class  to  the  prejudice  of  all  other 
classes.  In  illustration  of  this  fact,  imagine  a  pair  of  scales  for  the  pur- 
pose of  weighing  value  ;  put  a  piece  of  cloth,  or  any  other  product  of 
labor  into  one  scale,  worth,  in  ordinary  times  of  trade  and  credit,  a  pound 
sterling,  and  into  the  other  scale  a  pound,  either  in  the  shape  of  a  sove- 
reign or  bank  note,  and  the  scales  will  balance  each  other.  Now,  let  a 
monetary  panic  occur,  such  as  took  place  in  1847  and  1857,  arising  from 
gold  being  taken  from  the  Bank  of  England,  and  the  money  of  the  coun- 
try to  the  same  amount  reduced  by  the  destruction  of  bank  notes,  as  com- 
pelled by  the  act  of  1844,  and  mark  the  consequences.  The  price  of  all 
stocks  of  goods  in  traders'  hands  will  fall  some  30  to  70  per  cent.,  as  was 
the  case  in  those  panics.  We  will  assume,  for  the  sake  of  clearness,  the 
fall  to  be  50  per  cent.,  or  one-half  in  value.  The  owner  of  the  pound 
sterling  then  gets  double  the  quantity  of  cloth  in  exchange,  whilst  the 
manufacturer  gets  only  10s.  instead  of  20s.  for  his  article.  He  must  then, 
in  self-defence,  either  reduce  the  wages  of  his  workpeople,  or  run  short 
time,  or  close  his  mill  and  turn  them  adrift.  In  this  way  does  the  law, 
by  altering  at  times  the  measure  of  value,  ruin  hundreds  of  masters,  and 
reduce, thousands  of  the  working-classes  to  beggary  and  starvation. 
******* 

I  am,  sir,  your  obedient  servant, 

Hamer  Stansfeld. 
Highfield,  Windermere,  April  22,  1862. 


Events  of  the  Year  1857.  425 


CHAPTER   VII. 

The  Year  1857. 

This,  too,  was  one  of  the  remarkable  years  in  the  history  of  the  bank. 
An  advance  in  the  rate  of  interest  to  7  per  cent,  was  made  by  the  Bank 
of  England  on  the  12th  of  October,  1857,  and  was  deemed  a  measure  of 
self-protection,  and  one  fully  authorized  by  the  exigencies  of  trade.  It 
would  be  well  if  the  banks  in  other  countries  could,  under  similar  cir- 
cumstances, and  with  similar  prospective  advantages,  increase  their  rates 
on  loans  to  7,  8  or  9  per  cent.,  and  thereby  deter  speculation.  Since  the 
close  of  the  war  with  Russia,  in  the>  spring  of  1856,  the  policy  of  the 
Bank  of  England  has  not,  however,  been  a  consistent  one.  They  have 
adopted,  upon  too  slight  considerations,  and  in  repeated  instances,  during 
the  years  1856-7,  a  lower  rate  for  a  higher;  and,  in  turn,  (finding  their 
error,)  changed  from  the  low  to  the  higher  rate. 

On  the  4th  December,  1856,  after  numerous  failures  of  commercial 
houses  and  provincial  banks,  the  Bank  of  England,  in  view  of  large  ac- 
cumulations of  bullion,  reduced  the  rate  from  7  to  6|-  per  cent,  and  on 
the  18th,  (two  weeks  later,)  to  6  per  cent.,  the  Bank  of  France  at  the 
same  time  relaxing  its  restrictions,  by  taking  bills  having  75  days  (in- 
stead of  60)  to  run.  These  movements  were  hasty  and  unwise,  as  may 
be  seen  by  the  speedy  return  to  higher  rates. 

1857,  January  9. — The  rate  on  government  stock  advanced. 

April  2. — The  rate  on  commercial  bills  advanced  from  6  to  6^  per 
cent.,  and  on  the  9th  the  bank  advanced  the  rate  on  government  stock  to 
7  per  cent.,  and  refused  to  discount  brokers'  bills  having  more  than  one 
month  to  run. 

May  7. — The  bank  refused  to  make  loans  on  government  securities  on 
any  terms. 

June  18. — The  rate  of  discount  reduced  from  6|-  to  6  per  cent.  (The 
Bank  of  France,  on  the  25th,  from  6  to  5^.) 

Sept.  3. — The  Bank  of  England  recommenced  their  loans  on  six 
months'  bills  [of  late  confined  to  three  months.]  This  was  a  measure 
rather  calculated  to  encourage  than  repress  speculation. 

October  12. — The  rate  advanced  from  6  to  7  per  cent. 

October  19. — The  rate  advanced  from  7  to  8  per  cent.,  and  finally,  on 
the  5th  of  November,  to  9  per  cent. 

These  changes  in  the  bank  policy  occurred,  it  must  be  borne  in  mind, 
when  there  was  a  continuous  flow  of  gold  and  silver  from  England  to  In- 
dia and  China — a  current  that  should  forcibly  have  led  the  bankers,  the 
merchants,  the  legislators,  of  England,  to  fear  a  reaction.  We  will  refer 
to  the  figures,  and  show  the  export  of  gold  and  silver  from  England 
alone  to  the  East  during  the  years  1851  to  1855: 


426 


History  of  the  Bank  of  England. 


Export  of  Gold. 

1851, £  102,280 

1852, 921,739 

1853, 881,202 

1854,...'. 1,174,299 

1855, 947,272 


Dollars, . 


£4,026,792 
20,000,000 


Export  of  Silver. 
.  £1,716,100 
2,630,238 
4,710,665 
3,132,003 
6,409,889 

.    £18,598,895 
90,000,000 


Total. 
£1,818,380 
3,551,977 
5,590,866 
4,306,302 
7,358,161 

£22,625,686 
110,000,000 


For  the  first  months  of  1856,  the  export  of  silver  alone  was  £7,165,893. 
The  fact  is,  China  and  India  have  absorbed  annually  a  very  large  portion 
of  the  product  of  gold  and  silver — the  latter  especially.  Two  items  of 
Chinese  productions  will  alone  account  for  this,  the  enormous  exports  of 
silk  and  tea  to  England  and  North  America  for  five  years  having  been  as 
follows : 


1850,. 
1851,. 
1852,. 
1853,. 
1854,. 


Tea,  lbs. 

Haw  Silk,  lbs 

50,512,000 

1,769,000 

71,446,000 

2,055,000 

66,360,000 

2,118,000 

70,735,000 

2,838,000 

85,792,000 

4,576,000 

Thus,  in  less  than  eighteen  months,  there  had  been  at  least  eleven 
changes,  when  three  or  four  would  have  been  suflicient,  with  due  regard 
to  the  predisposition  to  overtrading  and  speculation,  which  was  strongly 
displayed  as  soon  as  peace  was  restored  in  1856.  Thus  the  bank  mania 
throughout  continental  Europe  was  so  strong  in  the  summer  of  1856, 
and  the  mania  for  joint-stock  operations  in  England  were  such  as  to  indi- 
cate, beyond  dispute,  that  so  sudden  and  violent  a  change  must,  ere  long, 
produce  a  reaction;  and  in  October,  1856,  the  bank  suddenly  raised  its 
rates  of  discount  one  per  cent. 

Suspension  of  the  Charter  Act  of  1844. — A  cabinet  council  was  held 
November  12th,  1857,  at  the  ofiicial  residence  of  the  First  Lord  of  the 
Treasury  in  Downing-street.  The  ministers  present  were — Viscount  Pal- 
MERSTON,  the  Lord  Chancellor,  Earl  Granville,  the  Marquis  of  Lans- 
downe,  the  Earl  of  Harrowby,  Sir  George  Gray,  the  Earl  of  Clarendon, 
the  Chancellor  of  the  Exchequer,  Sir  Charles  Wood,  the  Right  Hon.  R. 
Vernon  Smith,  Lord  Stanley,  of  Alderley,  the  Duke  of  Argyll,  and  the 
Right  Hon.  M.  T.  Baines.  The  following  letter  was  addressed  to  the 
governors  of  the  Bank  of  England : 

Doivning-street,  Nov.  12,  1857. 

Gentlemen, — Her  majesty's  government  have  observed  with  great  con- 
cern the  serious  consequences  which  have  ensued  from  the  recent  failure 
of  certain  joint-stock  banks  in  England  and  Scotland,  as  well  as  of  certain 
large  mercantile  firms,  chiefly  connected  with  the  American  trade. 

The  discredit  and  distrust  which  have  resulted  from  these  events,  and 
the  withdrawal  of  a  large  amount  of  the  paper  circulation  authorized  by 
the  existing  bank  acts,  appear  to  her  majesty's  government  to  render  it 
necessary  for  them  to  inform  the  Bank  of  England  that  if  they  should  be 
unable,  in  the  present  emergency,  to  meet  the  demands  for  discounts  and 
advances  upon  approved  securities,  without  exceeding  the  limits  of  their 


Events  of  the  Year  1857.  427 

circulation  prescribed  by  the  act  of  1844,  the  government  will  be  prepared 
to  propose  to  Parliament  upon  its  meeting  a  bill  of  indemnity  for  any  ex- 
cess so  issued. 

In  order  to  prevent  this  temporary  relaxation  of  the  law  being  extended 
beyond  the  actual  necessities  of  the  occasion,  her  majesty's  government 
are  of  opinion  that  the  bank  terms  of  discount  should  not  be  reduced 
below  their  present  rate.  Her  majesty's  government  reserve  for  future 
consideration  the  appropriation  of  any  profit  which  may  arise  upon  issues 
in  excess  of  the  statutory  amount. 

Her  majesty's  government  are  fully  impressed  with  the  importance  of 
maintaining  the  letter  of  the  law,  even  in  a  time  of  considerable  mercan- 
tile difficulty  ;  but  they  believe  that,  for  the  removal  of  apprehensions 
which  have  checked  the  course  of  monetary  transactions,  such  a  measure 
as  is  now  contemplated  has  become  necessary,  and  they  rely  upon  the  dis- 
cretion and  prudence  of  the  directors  for  confining  its  operation  within  the 
strict  limits  of  the  exigencies  of  the  case.     We  have,  &c., 

Palmerston, 
G.  C.  Lewis. 
To  the  Governor  and  Deputy-Governor  of  the  Bank  of  England. 

The  statement  of  the  bank  for  the  third  week  in  October  and  Novem- 
ber was  as  follows : 

October.  Nov.  25. 

Government  debt, £11,015,100         £11,015,100 

Government  securities 3,459,900         5,459,900 

Gold  coin  and  bullion  in  the 

Issues  Department, 8,777,105         6,784,145 

Total  amount  issued, £23,252,105         £23,259,145 

Deduct  notes  on  hand  in  Bank 

Department, 3,485,840         1,918,860 

Total  in  hand  of  the  public,. .     £  19,766,265         £  21,340,285 

The  gold  and  silver  coin  held  by  the  Bank  Department  was  less  than 
half  a  million,  (£479,527,)  to  meet  the  following  obligations : 

October  20.  November  25. 

Public  deposits, £4,861,700  £5,788,998 

Private  deposits, 11,263,900  14,951,516 

Seven  day  bills, 819,400  815,838 

£16,945,000         £21,556,352 

Although  the  bank  held  a  reserve  of  notes  of  £3,486,840  unemployed, 
yet  these  were  totally  insufficient,  with  the  small  amount  of  coin,  (£592,000,) 
to  meet  the  outward  current  of  gold  to  the  continent  and  to  the  east.  It 
is  true  that  bank  notes  were  legal  tender  elsewhere,  but  not  by  the  hank 
in  payment  of  its  debts. 

Thus  while  the  provisions  of  the  act  have  been  carefully  adhered  to, 
the  bank  is  totally  disqualified  from  using  any  portion  of  the  £8,777,105 
(held  in  coin  and  bullion)  in  payment  of  its  deposits.     Suspension  was 


428  History  of  the  Bank  of  England. 

therefore  unavoidable  in  view  of  the  exhaustion  of  gold  for  foreign  ob- 
jects. The  chief  end  in  view  by  Sir  Robert  Peel,  by  the  act  of  1844, 
was  to  place  a  limit  to  the  paper  issues  of  the  country — that  the  amount 
then  outstanding  should  be  held,  to  be  sufficient  and  should  not  be  in- 
creased, and  that  as  fast  as  the  country  banks  failed  or  wound  up,  the 
Bank  of  England  might  fill  the  vacuum  thus  created,  or  to  two-thirds  the 
amount  at  least.  So  anxious  was  Sir  Robert  Peel  for  the  success  of  the 
measure,  that  he  sought  to  give  the  utmost  effect  to  his  speech  by  the  fol- 
lowing peroration  : 

"A  quarter  of  a  century  has  passed  away  (viz.,  1819-1844)  since  I 
first  brought  forward  that  great  measure  which  forever  abolished  the  sys- 
tem according  to  which  issues  of  bank  notes  were  then  conducted.  To  me 
it  will,  therefore,  be  a  source  of  great  personal  gratification,  if  I  now  suc- 
ceed in  inducing  the  House  to  agree  to  a  measure  calculated  to  give 
additional  stability  to  that  which  Parliament  adopted  in  the  year  1819, 
and  to  prevent  those  fluctuations  so  dangerous  to  commercial  enterprise. 

"  When  I  see  the  danger  arising  from  the  Bank  of  England  having 
recourse  to  foreign  establishments  ;  when  I  look  at  the  fluctuations  which 
have  taken  place  in  our  currency,  defeating  all  the  calculations  on  which 
commercial  enterprise  could  rest,  *  *  my  gratification  will  be 
of  the  highest  and  purest  kind,  if  I  prevail  on  the  House  to  adopt  a 
measure  that  will  give  steadiness  to  the  character  of  our  resources,  which 
will  inspire  confidence  in  the  circulating  medium,  which  will  diminish  all 
inducements  to  fraudulent  speculations  and  gambling,  and  insure  its  just 
reward  to  commercial  enterprise,  conducted  with  honesty,  and  secured  by 
patience." 

During  the  debate  on  the  act  of  1844,  Mr,  Charles  Wood,  now  (Sir 
Charles  Wood,)  said  in  reference  to  the  provisions  of  the  bill : 

"  I  have  said  that  the  bank  shall  be  restricted  from  issuing  notes  upon 
securities  to  any  greater  extent  than  fourteen  millions.  This  restriction 
applies,  however,  to  ordinary  circumstances,  and  to  the  state  of  the  affairs 
of  the  bank.  The  case  may  occur  in  iohich  it  would  be  reasonable,  and, 
indeed,  might  be  necessary,  that  there  should  be  an  increase  of  the  issues 
of  the  bank  upon  securities,  supposing  the  country  circulation  to  amount 
to  eight  millions,  and  of  this  amount  two  millions  to  be  withdrawn,  either 
in  consequence  of  the  failure  of  banks,  or  in  consequence  of  agreements 
with  the  Bank  of  England  to  issue  Bank  of  England  paper;  in  that  case, 
in  order  to  supply  the  void,  it  may  be  necessary  that  the  bank  should  make 
an  increased  issue.  A  part  of  this  issue  may  fairly  be  made  upon  securities. 
Our  proposal  is,  that  the  profit  to  be  derived  from  such  an  issue  shall  be 
placed  to  the  account  of  the  government,  and  that  no  increased,  issue  upon 
securities  shall  take  place  without  a  communication  from  the  bank  to  gov- 
ernment, and  without  the  express  sanction  of  three  members  of  govern- 
ment, the  First  Lord  of  the  Treasury,  the  Chancellor  of  the  Exchequer, 
and  the  President  of  the  Board  of  trade.  We  do  not  contemplate,  and. 
do  not  intend  to  provide  for  an  increased  issue  upon  securities  in  any  other 
case  than  that  to  which  I  have  referred,  namely,  the  supply  of  a  void 
caused  by  the  withdrawal  of  some  considerable  portion  of  the  existing 
country  circulation." 

The  following  is  a  statement  of  the  changes  of  the  rate  of  interest  in 


Mvents  of  the  Fear  1857.  429 

the  Bank  of  England  for  the  year  1857,  with  the  bullion  in  the  bank  near- 
est each  period : 

1857,  April    2 6^  per  cent., £9,303,000 

1857,  June    18, 6  "         11,172,000 

1857,  July    16, 5i  "         11,840,000 

1857,  Oct.      8, 6  "         10,109,000 

1857,    "       12, 7  "         10,109,000 

1857,    "       19, 8  "         9,524,000 

1857,  Nov.     5, 9  "         8,497,000 

1857,     "         9, 10  "         7,170,000 

November  was  the  critical  period  of  the  year  1857.     The    Times  of 
November  12,  1857,  contained  these  announcements  : 

1.  Bank  charter  suspended. 

2.  Interest  in  London,  10  per  cent. 

3.  "      in  Hamburg,  10  per  cent. 

4.  "      in  Paris,  8^  per  cent. 

5.  "      in  New-York,  25  per  cent. 

6.  Suspension  of  cash  payments  general  by  all  banks  in  the  United 
States. 

7.  Two  banks  stopped  in  Glasgow,  and  one  in  Liverpool,  and  a  great 
bill  panic  in  London. 

8.  Commercial  credit  and  transactions  almost  suspended  iu  the  country, 

9.  Bullion  in  the  bank,  £7,170,000. 

10.  Reserve  notes  in  the  bank,  £975,000. 

11.  Bank  liabilities,  £40,875,000. 

One  gentleman,  during  the  heat  of  the  excitement  at  Glasgow,  went 
into  the  Union  Bank  and  presented  a  check  for  £500.  The  teller  asked 
him  if  he  wished  gold.  "  Gold  !"  replied  he,  ■"  no  ;  give  me  notes,  and  let 
the  fools  who  are  frightened  get  the  gold."  Another  gentleman  rushed 
into  the  same  bank  in  a  great  state  of  excitement,  with  a  check  for 
£1,400.  On  being  asked  if  he  wished  gold,  he  replied,  "  Yes."  "  Well," 
said  the  teller,  "there  is  £1,000  in  that  bag,  and  £400  in  this  one." 
The  gentleman  was  so  flurried  by  the  readiness  with  which  the  demand 
was  granted,  that  he  lifted  up  the  bag  with  the  £400  only,  and  walked 
off,  leaving  the  £1,000  on  the  counter.  The  teller,  on  discovering  the 
bag,  laid  it  aside  for  the  time.  Late  in  the  day  the  gentleman  returned 
to  the  bank  in  great  distress,  stating  he  had  lost  the  bag  with  the  £1,000, 
and  could  not  tell  whether  he  dropped  it  in  the  crowd  or  left  it  behind  him 
on  leaving  the  bank.  "  Oh,  you  left  it  on  the  counter,"  said  the  teller, 
quietly,  "  and  if  you  will  call  to-morrow  you  will  get  your  £1,000." 

The  Bank  of  England,  the  great  monetary  institution  which  so 
strongly  affects  the  financial  destinies  of  the  old  and  new  country,  in  this 
crisis  gave  an  additional  shock  to  the  Atlantic  trade  by  raising  rap  dly 
its  rate  of  discount — by  impeding  the  remittance  of  specie  to  the  United 
States  for  the  resumption  of  specie  payments  there;  and,  at  a  period  when 
the  rates  of  discount  were  enormously  enhanced,  by  treating  with  suspi- 
cion the  paper  of  all  American  houses — thus  virtually  depriving  them  of 
discount  altogether.  Thus,  solvent  houses  and  insolvent  houses  of  all 
28 


430  History  of  the  Bank  of  England. 

kinds  were  brought  down  :  for,  though  it  has  been  said  that  no  solvent 
house  could  want  accommodation,  yet,  inasmuch  as  so  many  houses  were 
endangered  by  the  mistrust  and  suspicion  of  the  regulators  of  the  dis- 
count market,  houses  having  good  bills,  but  with  the  names  of  suspected 
firms  upon  them,  were  left  with  inconvertible  paper.  A  bill  with  three 
names  was  reduced  to  two  names,  or  one  name,  and  placed  out  of  line. 
Next,  the  joint-stock  banks  were  disabled  from  rc-discounting,  and  a 
name  lost  thereby  ;  so  that  day  by  day  the  proportion  of  first-class  bills 
was  reduced,  and  no  man  having  good  bills  in  his  hand  could  tell — if  he 
kept  them  for  a  month,  a  fortnight,  a  week,  or  even  a  day — but  that  they 
might  become  discredited,  thus  depriving  all  of  resource  therefrom. 
Therefore  he  rushed  to  the  Bank  of  England  to  obtain  accommodation 
while  he  could  ;  and,  with  a  diminished  trade,  we  saw  the  phenomenon 
of  an  increased  amount  of  discount.  Those  who  had  produce  strove  to 
realize  and  obtain  resources ;  thus  prices  and  produce  were  depressed, 
and,  as  the  usual  course  of  credit  was  disturbed,  further  damage  was 
caused.  Alarm  was  spread  among  the  small  tradesmen  and  the  working, 
classes  of  Scotland  and  Ireland ;  notes  were  forced  in  for  gold,  deposits 
left  in  confidence  were  summarily  withdrawn,  and  the  banks,  unable  in- 
stantly to  realize  their  resources,  or  to  discount  the  paper  on  hand,  had, 
in  several  cases,  to  succumb  to  the  sudden  pressure.* 

In  such  a  crisis  rotten  houses  stopped,  because  rotten  houses  must 
stop,  and  it  is  besides  expedient  to  cover  a  disgrace  by  the  appearance 
of  yielding  to  a  general  misfortune  ;  but  solvent  houses  suspended,  some 
of  which  have  since  resumed,  and  others  will  pay  twenty  shillings  in  the 
pound.  The  liabilities  of  the  British  houses  and  banks  which  have 
failed  during  the  crisis  are  estimated  at  c£50,000,000. 

The  panic  spread  to  the  continent,  not  only  through  the  customary 
channels  of  trade,  but  because  the  Germans  of  late  years  have  acquired  a 
very  close  connection  with  the  States  by  the  intercourse  of  half  a  million 
of  emigrants,  while  in  the  trade  of  England  itself  the  Germans  have  now 
a  very  great  share.  The  desire  of  freedom  has  made  many  of  the  most 
active  men  of  Germany  citizens  or  denizens  of  England  and  the  United 
States,  while  those  at  home  look  with  interest  and  longing  to  these  emi- 
grant kinsmen.  Thus,  Germany  has  in  this  crisis  suffered  even  more 
than  France  and  Hamburg ;  Bremen  and  every  commercial  city  of  Ger- 
many have  been  stricken  with  disaster.* 

The  year  1857  was  noted  for  the  failure  of  the  Royal  British  Bank. 
The  directors  were  tried  and  convicted  of  fraud,  in  publishing  fictitious 
balance-sheets.  Lord  Campbell,  in  haranguing  the  three  defendants, 
Brown,  Esdaile  and  Cameron,  directors,  said  :  "  It  would  be  disgraceful 
to  the  law  of  this  country  if  this  were  not  a  crime  to  be  punished.  It  is 
not  a  mere  breach  of  contract  with  the  shareholders,,  or  with  those  who 
deal  with  the  bank,  but  it  is  a  criminal  conspiracy  to  do  that  which  in- 
evitably leads  to  great  public  mischief,  to  the  ruin  of  families,  and  re- 
ducing the  widow  and  the  orphan  from  aflEluence  to  destitution."  Many 
persons  will  think  that  a  sentence  of  one  year's  imprisonment,  among  the 
most  favored  class  of  prisoners,  upon  men  who  had  been  found  guilty  of 

*  Westminster  Review,  Jan.,  1858. 


U vents  of  the  Tear  1857.  431 

so  heinous  an  offence  as  this,  .with  not  one  circumstauce  of  mitigation 
which  could  be  pleaded  in  their  favor,  was  a  particularly  light  one.  We 
have  no  objection  to  a  distinction  in  the  punishments  awarded,  and,  as 
the  jury  had  recommended  Owen,  Stapleton,  Kennedy  and  Macleod 
to  the  merciful  consideration  of  the  court,  it  was  right  that  their  recom- 
mendation should  be  taken  into  account ;  but  Lord  Campbell  had  left 
himself  no  lesser  punishment  to  award  which  was  at  all  adequate  to  their 
guilt,  and  their  sentence  was  accordingly  almost  nominal.  We  fear  that 
this  manner  of  dealing  with  such  misdemeanants  will  disarm  future  pro- 
ceedings of  all  their  terror,  and  render  this  prolonged  trial  barren  of  re- 
sult to  the  community.* 

In  London  no  bank  failed.  In  Liverpool,  the  Borough  Bank,  in  Glas- 
gow, the  Western  Bank  of  Scotland,  in  Newcastle,  the  Northumberland 
and  Durham  District  Bank,  failed  in  the  months  of  October  and  Novem- 
ber last.  The  City  of  Glasgow  and  Wolverhampton  banks  suspended 
payment,  but  have  since  resumed.  The  House  of  Commons  committee 
examined  Mr.  Joshua  Dixon,  who,  in  August,  1857,  first  assumed  the 
post  of  managing  director  of  the  Borough  Bank ;  Mr.  Fleming,  who  was, 
after  July,  1857,  assistant-manager,  manager  or  liquidator  of  the  West- 
ern Bank  of  Scotland  ;  and  Mr.  Kirkman  Hodgson,  a  member  of  the 
House,  and  director  of  the  Bank  of  England,  who,  being  well  acquainted 
with  the  trade  of  Newcastle,  went  there  in  November,  1857,  to  inquire 
how  far  the  Northumberland  Bank  might  be  safely  aided.f 

The  Western  Bank  of  Scotland  was  founded  in  1832.  In  1834  it  was 
already  in  difficulties,  and  their  correspondents  in  London  dishonored 
their  bills.  They  applied  to  the  other  banks  for  assistance,  and  received 
it,  under  certain  conditions.  In  the  year  1838  they  applied  to  the 
Board  of  Trade  for  letters  patent,  which  were  refused.  At  this  time  the 
Bank  of  Scotland  and  other  banks  addressed  a  memorial  to  Mr.  Poulet 
Thompson,  alleging  the  breach  of  the  conditions  referred  to.  In  1847 
the  Western  Bank  was  again  in  difiiculties,  and  was  assisted  by  the 
Bank  of  England,  receiving  an  advance  of  £300,000.  The  then  man- 
ager, Mr.  Donald  Smith,  appears  to  have  taken  alarm  from  the  occur- 
rences of  1847  ;  and  in  1852,  when  he  retired,  the  bank,  though  not  in  a 
satisfactory  position,  stood  better  than  it  had  stood  before  since  1847. 
When  it  failed,  on  9th  of  November,  1857,  it  appeared  that  the  four 
insolvent  houses  of  MacDonald,  Monteith,  Wallace  and  Pattison 
were  indebted  to  it  in  the  sum  of  £1,603,000;  the  whole  capital  of  the 
bank  being  only  £1,500,000.  One  of  the  conditions  of  the  co-partnery 
was,  "  That  if  it  shall  at  any  time  appear,  on  balancing  the  company's 
books,  that  a  sum  equal  to  £25  per  centum  on  the  advanced  capital 
stock  of  the  company  has  been  lost  in  prosecution  of  the  business  of  the 
company,  such  loss  shall,  ijjso  facto,  and  without  the  necessity  of  any 
further  procedure,  dissolve  and  put  an  end  to  the  company.f 

The  panic  of  1857  raged  the  most  severely  in  Hamburg,  where,  al- 
though the  basis  was  the  soundest,  it  was  yet  the  narrowest.  In  France 
where  the  basis  was  the  widest,  the  panic  was  the  least  severe.     In  Great 

*  London  Times,  March,  1858. 

f  Parliamentary  Committee's  Report,  1858-1859, 


432  History  of  the  Bank  of  England. 

Britain,  althougli  the  basis  was  sound,  yet  tlic  panic  was  severe  by  the 
basis  having  been  artificially  narrowed  by  the  act  of  1844.  In  Ham- 
burg, France  and  Great  Britain  the  bases  were  all  sound,  but  in  the 
United  States  the  basis  Avas  unsound,  because  the  specie  in  proportion  to 
the  notes  was  inadequate  to  insure  their  convertibility.  The  effect  of  the 
panic  of  1857  on  these  banks  was,  that  the  banks  of  the  United  States 
and  of  Hamburg  stopped  payment ;  that  the  Bank  of  England  would 
have  stopped,  had  not  the  act  of  1844  been  suspended,  permitting  the 
extension  of  the  money  basis  ;  but  that  the  Bank  of  France  did  not  stop 
payment,  liaving  no  restriction  on  its  issues  beyond  the  liability  to  con- 
vertibility.* 

A  new  committee  on  the  Bank  of  England  charter  had  under  consid- 
eration, in  1857,  the  terms  for  the  proposed  extension.  The  committee 
was  composed  of  twenty-five  members,  comprising  the  chancellor  of  the 
exchequer  and  four  ex-chancellors,  namely,  Mr.  Disraeli,  Sir  Francis 
Baring,  Sir  C.  Wood  and  Mr.  Gladstone  ;  also,  Sir  J.  Graham  ;  Mr. 
Spooner,  banker,  of  Birmingham ;  Mr.  G.  A.  Hamilton,  the  financial 
secretary  to  the  treasury  under  Lord  Derby's  government,  and  chairman 
of  the  recently  dissolved  London  and  Paris  Bank ;  Mr.  Glyn,  London 
banker ;  Mr.  Wilson,  the  financial  secretary  to  the  treasury ;  Mr.  Cay- 
ley,  a  director  of  the  Commercial  Bank ;  Mr.  Vance,  a  Dublin  mer- 
chant ;  Mr.  Weguelin,  the  late  governor  of  the  Bank  of  England ;  Mr. 
Hildyard,  Q.  C.  ;  Mr.  Hankey,  a  director,  and  who  was  formerly  gov- 
ernor of  the  Bank  of  England  ;  Mr.  Blackburn,  chairman  of  the  Edin^ 
burgh  and  Glasgow  Railway;  Mr.  M.  T.  Smith,  London  banker;  Mr. 
Fergus,  a  Scotch  manufacturer ;  Mr.  Hope  Johnstone  ;  Mr.  J.  L.  Ricar- 
Do,  a  director  of  the  London  and  Westminster  Bank;  Mr.  Ennis,  the 
governor  of  the  Bank  of  Ireland ;  Mr.  Tite,  the  chairman  of  the  Bank  of 
Egypt,  and  a  director  of  the  London  and  Westminster  Bank ;  Mr.  Ful- 
ler, Mr.  Ball  and  the  Earl  of  Gifford,  formerly  private  secretary  to 
Lord  Panmure. 


*  Letter  from  Hamer  Stansfeld,  of  Otley,  England :  see  Bankers'  Magazine,  New- 
York,  January,  1860. 


Progress  of  Banking  in  Great  Britain.  433 


CHAPTER     VIII. 

Years  1858,1859,1860. 

THE    BANK   ACT    OF     1844 FAILURES     OF     ISSY LOANS    TO    BILL-BROKERS FORCED     ISSUE 

OF  £2,000,000  BANK  NOTES — BANK  FAILURES  IN  SCOTLAND — CRISIS  IN  IRELAND — CRISIS 
IN  LIVERPOOL CONTINENTAL  BANKS PRICE  OF  GOLD OPINIONS  OF  LORD  OVER- 
STONE YEARLY     AVERAGE     OF     NOTES,     1844-1858 EVIDENCE    OF    BANK     DIRECTORS 

F.ULURES     OF     COMMERCIAL     HOUSES JOINT-STOCK    BANKS — FLUCTUATIONS     IN     PRICES 

CONTINENTAL   BANKING DEATH   OF    MR.    TOOKE. 

The  Year  1858. 

A  REPORT  from  the  select  committee  of  tlie  House  of  Commons,  appoint- 
ed to  inquire  into  the  operations  of  the  bank  acts  of  1844,  and  of  the 
bank  acts  for  Ireland  and  Scotland  of  1845,  and  into  the  causes  of  the 
recent  commercial  distress,  and  to  investigate  how  far  it  has  been  affected 
by  the  laws  for  regulating  the  issue  of  bank  notes  payable  on  demand, 
was  made  in  1858.  The  committee  was  appointed  on  the  11th  Decem- 
ber, 1857,  and  on  the  8th  February,  1858,  the  following  members  were 
appointed,  viz. :  The  chancellor  of  the  exchequer,  Mr.  Disraeli,  Sir 
James  Graham,  Sir  Charles  Wood,  Sir  Francis  Baring,  the  Earl  of 
Giff"ord,  and  Messrs.  Spooner,  George  A.  Hamilton,  Gladstone,  Cat- 
ley,  Vance,  Cardwell,  Blackburn,  Wilson,  Weguelin,  IIanket, 
Hope  Johnstone,  Ennis,  Fuller,  Fergus,  John  L.  Ricardo,  M. 
Tucker  Smith,  Glyn,  Ball,  Tite. 

The  following  witnesses  were  examined :  Messrs.  Sheffield  Neave 
and  Bonamt  Dobree,  governor  and  deputy-governor  of  the  Bank  of 
England  ;  Thomas  Matthias  Weguelin,  M.  P. ;  Alderman  David  Salo- 
MANS,  director  of  the  London  and  Westminster  Bank ;  William  Rod- 
well,  banker  at  Ipswich;  John  Ball,  accountant;  James  Edward 
Coleman,  accountant ;  James  Holgate  Foster,  merchant ;  Robert 
Slater,  merchant ;  Sampson  Samuel  Lloyd,  banker,  Birmingham ; 
Philip  Henry  Muntz,  merchant,  Birmingham  ;  Right  Hon.  Sir  George 
Clerk,  Bart.,  deputy-governor  of  the  Bank  of  Scotland ;  Laurence  Rob- 
ertson, cashier  of  the  Royal  Bank  in  Edinburgh ;  Kirkman  Daniel 
Hodgson,  director  of  the  Bank  of  England  ;  Charles  Halliday,  governor 
of  the  Bank  of  Ireland,  and  John  Barlow,  director  of  the  same  ;  Joshua 
Dixon,  managing  director  of  the  Borough  Bank  of  Liverpool ;  James 
Robertson,  manager  of  the  Union  Bank  of  Glasgow ;  John  Torr,  mer- 
chant, Liverpool ;  John  Ennis,  late  governor  of  the  Bank  of  Ireland ; 
James  Bristow,  director  of  the  Northern  Banking  Company,  Belfast ; 
James  Simpson  Fleming,  one  of  the  liquidators  of  the  Western  Bank  of 
Scotland  ;  John  Smith,  banker ;  William  Digges  Latouche,  private 
banker,  of  Dublin. 


434  History  of  the  Bank  of  England. 

The  committee,  on  the  1st  July,  1858,  reported  as  follows:* 

"  The  ten  years  which  have  elapsed  since  the  last  committee  sat  under 
the  same  order  of  reference,  viz.,  the  Committee  on  Commercial  Distress, 
which  reported  in  1848,  have  been  marked  by  many  circumstances  of  pe- 
culiar interest  and  importance.  The  foreign  trade  of  the  United  King- 
dom has  in  that  period  increased  with  a  development  unprecedented, 
perhaps,  by  any  other  instance  iu  the  history  of  the  w'orld.  The  exports 
which,  before  1848,  had  never  exceeded  £60,110,000 — the  amount  which 
they  attained  in  1845 — have  risen,  with  very  little  variation,  and  with 
great  rapidity  ;  and  in  1857,  notwithstanding  the  severe  commercial 
pressure  which  marked  the  latter  portion  of  that  year,  they  stood  at 
£122,150,005.  In  the  year  1849  the  newly-discovered  mines  of  Califor- 
nia began  to  add  perceptibly  to  the  arrivals  of  gold  ;  and  in  1853  the 
supply  was  increased  by  the  still  more  fertile  discoveries  in  Australia. 
In  the  seven  years  there  has  been  an  increase  in  the  European  stock  of 
bullion  of  £80,700,000.  ***** 

"  Your  committee  will  now  state  to  the  House  the  general  outline  of 
commercial  disasters,  as  it  occurred  in  the  United  Kingdom,  The  first 
occurrence  in  this  country  which  caused  alarm  was  the  failure  of  the 
house  of  MacDonald  &  Co.,  of  Glasgow  and  London,  which  took  place 
in  October,  and  was  accompanied  by  the  failures  of  Monteith  &  Co.  and 
Wallace  &  Co.,  of  Glasgow.  The  house  of  MacDonald  employed  a 
great  many  workpeople  in  sewing  muslin  goods  for  the  home  trade  and 
for  the  American  market,  and  this  they  carried  on  to  a  very  large  extent. 
They  had  been  in  fair  credit  till  very  nearly  the  time  of  their  failure,  but 
shortly  before  that  period  they  are  described  as  having  given  out  that 
they  had  changed  their  mode  of  doing  business  for  the  purpose  of  em- 
bracing a  wider  field.  This,  however,  is  represented  to  have  been  a 
deception,  intended  to  cover  a  system  to  which  they  had  recourse,  of 
drawing  fictitious  bills,  and  to  give  to  these  bills  the  appearance  of  genu- 
ine business  transactions.  From  the  records  of  the  public  tribunals,  it 
appears  that  a  very  considerable  number  of  persons  (one  of  the  partners 
is  said  to  have  admitted  as  many  as  seventy-five)  in  London  and  other 
places,  were  employed  by  this  firm,  for  a  small  commission,  to  put  their 
names  to  fictitious  bills,  which  were  then  discounted,  a  large  proportion 
of  them  in  Glasgow  ;  and  when  the  house  of  MacDonald  failed,  it  was 
found  to  be  indebted  to  the  Western  Bank  £422,000.  The  house  of 
Monteith  &  Co.  was  indebted  to  the  same  bank  £537,000  ;  that  of  Wal- 
lace &  Co.,  £227,000."  ***** 

Yearly  Averar/e  of  Notes. — It  has  been  observed  before,  that  while,  on 
the  one  hand,  the  great  increase  of  retail  transactions  has  caused  an  in- 
creased demand  for  the  smaller  notes,  concurrently  with  the  increased 
demand  for  gold,  yet,  on  the  other  hand,  so  great  has  been  the  effect  of 
increasing  facilities  in  banking,  that  a  saving  of  a  corresponding  amount 
has  been  effected  in  the  larger  notes.  The  proportions  are  those  repre- 
sented in  the  following  table  :f 


*  For  the  report  in  full,  thirty-eight  pages,  see  Bankers'  Magazine,  December, 
1859. 
f  House  of  Commons  Report,  July,  1858. 


Progress  of  Banking  in  Great  Britain, 


435 


Yearly  Average  of  Notes  with  the  Public. 


Notes 

Per  cent. 

Notes 

Per  cent. 

Notes 

Percent. 

Year. 

of&5 

of  total 

of  £20 

of  total 

of  £200 

of  total 

Total. 

and  £10. 

circulation. 

to  £100. 

circulation. 

to  £1,000.  circulation. 

£m. 

£m. 

£m. 

£m. 

1844,. 

.    9,263 

. .     45.7     . 

.     5,735 

..     28.3     . 

5,253     . 

26.       .. 

20,241 

1845,. 

.     9,698 

..     46.9     . 

.     6,082 

..      29.3     . 

4,942     . 

23.8    .. 

20,722 

1846,. 

.     9,918 

. .     48.9     . 

.     5,778 

.  .      28.5     . 

4,590     . 

22.6    .. 

20,286 

184  V,. 

.     9,591 

..     50.1     . 

.     5,498 

.,      28.7     . 

4,066     . 

21.2    .. 

19,155 

1848,. 

.     8,732 

..     48.3     . 

.     5,046 

. .     27.9     . 

4,307     . 

23.8    .. 

18,085 

1849,. 

.     8,692 

..     47.2     . 

.     5,234 

..      28.5     . 

4,477    . 

24.3    .. 

18,403 

1850,. 

.     9,164 

. .     47.2     . 

.     5,587 

..     28.8     . 

4,646     . 

24.       .. 

19,398 

1851,. 

.     9,362 

..     48.1      . 

.     5,554 

.  .      28.5     . 

4,557     . 

23.4    .. 

19,473 

1852,. 

.     9,839 

..45. 

.     6,161 

..      28.2     . 

5,856     . 

26.8    ,. 

21,856 

1853,. 

.  10,699 

..     47.3     . 

.      6,393 

..     28.2     . 

5,541     . 

24.5    .. 

22,653 

1854,. 

.  10,565 

..51. 

.      5,910 

. .     28.5     . 

4,234    . 

20.5    .. 

20,709 

1855,. 

.  10,628 

..     53.6     . 

.     5,706 

.  .      28.9     . 

3,459     . 

17.5    .. 

19,793 

1856,. 

.  10,680 

. .      54.4      . 

.      5,645 

.  .      28.7     . 

3,323     . 

16.9    .. 

19,648 

1857,. 

.  10,569 

..      54.7      . 

.     5,567 

..     28.6     . 

3,241     . 

16.7    .. 

19,647 

Failures  in  Scotland. — The  causes  which,  in  the  judgment  of  the  bank 
directors,  immediately  led  to  the  failures,  were  detailed  by  them  in  their 
correspondence  with  the  treasury.  The  treasury  letter  was  the  subject  of 
discussion  in  the  House,  and  an  act  of  indemnity  having  passed,  the  com- 
mittee do  not  feel  called  upon  to  say  more  than-that  the  evidence  appears 
to  them  to  show  that  the  discretion  of  the  government  was  properly  exer- 
cised. 

Over-Issue  of  £2,000 fiOQ. — On  the  12th  November,  the  discounts  at 
the  bank  exceeded  two  millions.  The  following  figures  sufficiently  ex- 
hibit the  result  of  the  foregoing  operations,  viz. : 


Bullion. 

10, £7,411,000 

11, 6,666,000 

12, 6,524,000 


Reserve. 

£2,420,000 

1,462,000 

581,000 


Discounts  and 
Advances. 

£14,803,000 
15,947,000 
18,044,000 


The  government  letter  was  issued  on  the  12th.  Whatever  effect  this 
letter  may  have  had  in  other  ways  in  calming  the  public  mind,  and  so 
tending  to  mitigate  the  severity  of  the  pressure,  it  did  not  immediately 
diminish  the  demand  for  discounts  and  advances.  This  continued  to  in- 
crease until  21st  November,  on  which  day  the  bank  had  advanced  in  dis- 
counts, £21,600,000,  a  sum  exceeding  the  Avhole  amount  of  their  depos- 
its, both  public  and  private  ;  a  sum  nearly  threefold  the  amount  of  tlieir 
advances  in  July,  when  the  rate  was  reduced  to  five  and  a  half  per  cent., 
and  more  than  double  what  they  had  advanced  on  the  27th  October, 
when  the  first  bank  failed.  Half  of  these  loans  were  made  to  the  bill- 
brokers,  and  were  partly  made  upon  securities  which,  under  other  cir- 
cumstances, the  bank  would  have  been  unwilling  to  accept.  They  were 
made  for  the  purpose  of  sustaining  commercial  credit  in  a  period  of  ex- 
treme pressure.  The  letter  was  issued  on  the  12th  November ;  but 
whilst  in  1847  it  was  not  found  necessary  for  the  bank  directors  to  avail 
themselves  of  the  permission  so  given  them  to  exceed  the  limits  imposed 
by  law,  that  necessity  in  this  instance  actually  arose.  An  issue  to  the 
extent  of  £2,000,000  beyond  the  legal  issue  was  made  to  the  banking 


436 


History  of  the  Bank  of  England. 


•  department.     The  following  account  shows  the  sums  actually  issued  from 
the  bank  to  the  public  in  November : 

IfOTES   ISSUED   TO    THE   PuBLIC    ON    SECURITIES,    BEYOND    THE    StaTUTOEY 

Limit  of  £14,4'75,000. 

November  23,! i397,000 

24, 317,000 

25, 81,000 

26, 243,000 

27 342,000 

28-29, 184,000 

30, 15,000 

Average  of  18  days, 488,830 


November  13 £,  186,000 

14-15, 622,000 

16, 860,000 

17, 836,000 

18, 852,000 

"          19, 896,000 

"          20 928,000 

21-22, 617,000 


As  regards  the  alteration  of  the  rate  of  interest  by  the  bank  in  the  lat- 
ter part  of  the  year  1857,  it  is  stated  in  the  report  of  the  bank  commit- 
tee, that  on  the  16th  of  July,  the  rate  was  reduced  from  six  to  five  and  a 
half  per  cent.  This  continued  to  be  the  minimum  rate  of  discount  at  the 
bank  until  the  8th  of  October,  when  it  was  raised  again  to  six  per  cent. 
Four  days  later,  on  the  12th  of  October,  the  rate  was  raised  to  seven  per 
cent.  In  seven  days,  on  the  19th  of  October,  the  rate  was  fixed  at  eight 
per  cent.,  and  it  was  afterwards  raised  to  nine  per  cent,  on  the  5th  of  No- 
vember, and  to  ten  per  cent,  on  the  9th  of  November.  Thus,  in  the 
course  of  only  one  month',  between  the  8th  of  October  and  the  9th  of 
November,  the  rate  was  advanced  from  five  and  a  half  to  ten  per  cent.* 

The  government  letter,  authorizing  an  extension  of  the  circulation,  was 
issued  on  the  12th  November.  An  issue  of  notes  to  the  extent  of  tAvo 
millions  beyond  the  legal  issue  was  made  to  the  banking  department  of 
the  Bank  of  England,  but  not  more  than  £928,900  of  notes  were  issued 
to  the  public  beyond  the  statutory  limit.  That  additional  amount  was 
reached  on  the  20th  November,  after  which  date  the  excess  rapidly  de- 
clined until  the  end  of  the  month,  when  it  was  discontinued.  The  legal 
circulation  was  only  exceeded  for  a  period  of  eighteen  days.* 

Lord  OvERSTONE. — The  advocates  of  the  theory,  as  it  is  called,  of  the 
act  of  1844,  are  far  from  contending  that  their  theory  is  completely  car- 
ried into  effect  by  the  provisions  of  the  act.  The  origin  of  that  legisla- 
tion is  thus  referred  to  by  Lord  Overstone  : 

"  I  had  no  connection,  political  or  social,  with  Sir  Robert  Peel.  I 
never  exchanged  one  word  upon  the  subject  of  this  act  with  Sir  Robert 
Peel,  in  my  life,  neither  directly  nor  indirectly.  I  knew  nothing  what- 
ever of  the  provisions  of  this  act  until  they  were  laid  before  the  public ; 
and  I  am  happy  to  state  that,  because  I  believe  that  what  little  weight 
may  attach  to  my  unbiassed  conviction  of  the  high  merits  of  this  act,  and 
the  service  which  it  has  rendered  to  the  public,  may  be  diminished  by  the 
impression  that  I  have  something  of  personal  vanity  in  this  matter.  I 
have  no  feeling  whatever  of  the  kind.  The  act  is  entirely,  so  far  as  I 
know,  the  act  of  Sir  Robert  Peel,  and  the  immortal  gratitude  of  this 
country  is  due  to  him  for  the  service  rendered  to  it  by  the  passing  of 

*  Review  of  the  bank,  by  Richard  Valpy,  read  before  the  British  Association  for 
the  Advancement  of  Science,  September,  1868.  See  Bankets'  Magazine,  New- York, 
May,  1860. 


Progress  of  Banking  in  Great  Britain. 


437 


that  act.  He  has  never  been  properly  appreciated  ;  but  year  by  year  the 
character  of  tliat  man  upon  this  subject  will  be  appreciated.  By  the  act 
of  1819,  Sir  Robert  Peel  placed  the  monetary  system  of  this  country 
upon  an  honest  foundation,  and  he  was  exposed  to  great  obloquy  for 
having  so  done.  By  the  act  of  1844  he  has  obtained  ample  and  efficient 
security  that  that  honest  foundation  of  our  monetary  system  shall  be 
effectually  and  permanently  maintained  ;  and  no  inscription  can  be  writ- 
ten upon  his  statue  so  honorable  as  that  he  restored  our  money  to  its  just 
value  in  1819,  and  secured  for  us  the  means  of  maintaining  that  just 
value  in  1844.     Honor  be  to  his  name."* 

The  extraordinary  rise  in  prices  in  London  markets  between  1851  and 
1857,  and  the  consequent  speculation  connected  therewith,  will  be  indi- 
cated by  the  following  comparative  table.  In  the  United  States  the 
prices  of  market  produce,  labor,  and  materials  requiring  labor  for  their 
production,  have  all  increased  from  thirty  to  fifty,  and  in  some  instances 
to  one  hundred  per  cent.  : 

Jan.,  1851. 
53      @  58s. 
@  28s. 
@  32d. 
@  lOd. 
@  80s. 
@  30 
@  36 
@  42 
@  46 
@  42 
@  17s. 
@  46 


Coffee, 

Sugar 

Rum,  Jamaica, 

Tobacco, 

Butter, 

Beef,  (8  lbs.,) 

Do.  prime, 

Mutton, 

Do.  prime, 

Pork, 

Silk,  raw,  lbs. , 

Flax,  tons, 

Wool,  (240  lbs.,) £14 

Logwood, VO 

Seal  oil, £37 


26 
26 

4J 
78 
28 
32 
34 
44 
30 

9 
38 


@  80s. 


Olive  oil, 43     @  . . 

Palm  oil, 29     @  . . 

Tallow, 36^  @  . . 

Leather,  lbs., 12     @  23d. 

Saltpetre,  cwt., 27^  @  29^s. 

Ashes,  pearl, 30|  @  31 

Copper, £84     @  . . 

Iron,  tons, 5f  @    6 

Do.  Swedish llf  @  .. 

Lead,  tons, IT^  @  . . 

Steel,  Swedish, 15     @  . . 

Tin,  tons, 84  @  . . 


Jan.,  1854. 
53  @  60s. 
21  @  65s. 
42  @  46d. 
2i  @  8d. 
104  @  .. 
@  46 
@  50 
@  54 
@  52 
(5)  44 


42 
48 
48 
50 
42 


12i-  @  16i 


35 

15i 
110 

43 

63 

43 

60 

15 

27 

29  @ 
126  @ 

9J  @ 

12i  @ 

23i  (a) 

I7i  @ 
126  (3) 


@  10 
(Ob  31 


Feb.,  185T. 
58  @  67 

36  @  40 
44  @  46 

8  @  11 
112  @  .. 
40  @  46 
48  @  50 
48  @  52 
54  @  58 

44  @  52 
16  @  25 
52  @  . . 
37®  .. 

110  @  .. 
50  @  .. 
61@  .. 
47  @  .. 
62  @  .. 
24  @  31 

37  @  46 

45  @  . . 
135  @  .. 

9@  .. 

15@  .. 

23  @  .. 

20  @  .. 

143  (5)  . . 


These  facts  are  important,  as  demonstrating  the  progressive  advance  of 
prices  according  to  the  increased  bulk  of  the  precious  metals.  The  same 
result  occurred  in  the  century  following  the  discovery  of  gold  in  America, 
(1500-1600,)  although  the  increased  production  was  far  less  than  it  is 
now.  Rents,  wages,  family  supplies,  labor  generally — all  advanced  from 
fifty  to  one  hundred  per  cent.  It  is  true  that  the  preseut  accumulation  of 
precious  metals  is  diffused  among  a  much  larger  population  and  over  a 
more  extended  region  of  country  than  in  the  sixteenth  or  seventeenth 
centuries — but  similar  causes  will  produce  similar  results,  and  labor  will 

*  House  of  Commons  Report,  July,  1858. 


438  History  of  the  Bank  of  England. 

secure  for  itself  a  remuneration  commensurate  with  the  increased  ex- 
penses of  living. 

Continental  Banking. — It  will  be  instructive  now  to  turn  to  the  north 
of  Europe  to  survey  the  condition  of  countries  where,  as  in  Hamburg, 
the  currency  is  exclusively  metallic,  and  to  compare  the  state  of  things 
there  with  that  which  existed  here  under  the  laws  which  regulate  the 
currency  in  this  kingdom.  In  Hamburg,  on  the  23d  November,  1857, 
commercial  confidence  is  stated  to  have  been  entirely  at  an  end ;  so  that 
only  the  bills  of  three  or  four  of  the  first  houses  were  negotiable,  at  the 
highest  rate  of  discount.  In  the  first  instance,  some  of  the  leading 
houses  and  the  banks  originated  a  plan  for  relief,  viz.,  the  subscription  of 
about  £1,000,000,  and  the  appointment  of  a  committee  to  give,  by  en- 
dorsement, the  credit  of  this  fund  to  the  current  bills.  At  first  it  seemed 
that  confidence  was  much  restored,  but  in  two  days  this  hope  vanished  ; 
and  on  the  25th  the  aspect  of  aft'airs  was  again  very  gloomy.  On  the 
27th,  a  meeting  of  the  Biirgerschaft  was  held,  and  a  new  arrangement 
Avas  proposed  by  the  Senate  for  the  issue  of  government  bonds  on  the 
deposit  of  goods,  funds  and  shares,  to  the  amount  of  £1,125,000.  On 
the  following  day  the  feeling  of  the  exchange  was  better,  in  consequence 
of  this  government  measure,  and  of  the  arrival  of  considerable  quantities 
of  silver.  Yet,  on  the  1st  of  December,  our  consul  writes:  "The  em- 
barrassments of  the  mercantile  community  here  still  continue  undimin- 
ished." And  on  the  3d,  "  There  is  no  deficiency  of  silver  in  the  Ham- 
burg Bank ;  indeed,  the  amount  in  the  cellars  of  the  bank  is  now  much 
larger  than  it  has  been  at  any  former  period,  but  a  total  want  of  confi- 
dence prevents  its  holders  from  parting  with  it."  The  government  bonds 
could  not  be  discounted.  A  loan  was  ultimately  obtained  from  Vienna  ; 
but  even  the  arrival  of  the  amount  in  specie  failed  to  produce  the  desired 
effect,  until  the  Senate  reluctantly  proposed  that  it  should  be  entrusted 
to  a  secret  committee,  to  be  by  them  lent  out  on  good  security.  On  De- 
cember 12,  so  soon  as  it  was  known  that  by  the  aid  of  the  government 
the  leading  houses  would  fulfil  their  engagements,  the  panic  ceased. 
Money  at  once  became  abundant,  and  in  about  a  fortnight  the  rate  of 
discount  for  the  best  bills  fell  to  two  and  three  per  cent.* 

Prices. — A  considerable  amount  of  the  loss  sustained  through  the 
failures  in  1857  has  arisen  through  the  fall  in  price  of  merchandise. 
Some  notion  may  be  formed  of  the  loss  experienced  in  consequence  of 
the  panic,  from  the  following  prices  of  raw  silk  in  July,  1857,  and  Janu- 
ary, 1858:  Bengal  silk,  in  July,  1857,  was  quoted  15s.  to  33s.  6d. ;  in 
January,  1858,  lis.  to  24s.;  fall,  28  per  cent.  China  silk,  July,  1857, 
10s.  to  29s. ;  January,  1858,  6s.  to  7s.;  fall,  66|  per  cent.  Brutia  silk, 
Jul}^,  1857,  38s.  to  42s.  6d. ;  January,  1858,  10s.  6d.  to  32s.;  fall,  46 
per  cent.  Tallow  fell  from  60s.  to  50s.  Sugar,  from  55s.  to  35s.  per 
cwt.  Cotton,  from  7d.  to  6d.  per  lb.  Tin,  from  135s.  to  122s.  per 
cwt.  Tea,  Congou,  from  Is.  3d.  to  Is.  per  lb.  Taken  generally,  the  loss 
occasioned  by  the  panic  on  the  prices  of  commodities  could  not  be  less 
than  20  to  30  per  cent.  The  alteration  of  value  in  Mr.  Muntz's  stock 
alone  was  more  than  £40,000.     In  Liverpool,  the  decline  was  not  less 

*  House  of  Commons  Report,  July,  1858. 


Death  of  Thomas  Tooke.  439 

than  80  per  cent.     The  following  are  the  prices  of  the  principal  articles 
before  and  during  the  panics  in  lS47-'48  and  1857-58  :* 

Ist.Aug.,  1st  Jan.,  1st  Aug.,  1st  Jan., 

1S47.  1S48.   Decline.  1S5T.  1S5S.  Decline. 

Cotton,  Mid.  Orleans,  ... .           Td.  45ad.      2s^d.  ..  8,'ad.  6)^d.  l%d.  lb. 

"Wool,  Australian, Is.  3d.  to  2s.  8d.    Is.  to  23.    3d.     . .  2s.  to  2s.  7d.  Is.  9d.  to  2s.    5d.    " 

Sillc,  China, 13s.  to  19s.  10s.  to  16s.    3s.     . .  23s.  to  29s.  15s.  to  19s.  9s.     " 

Jute,  E.  I., £20  £14          £6     ..  £24  £15  £9  ton. 

Sugar,  E.  I.  »&  Mauritius,.    40s.  to  52s.  34s.  to  4Ss.    5s.     ..  52s.  to  62s.  35s.  to  50s.  5s.  cwt. 

Coffee,  Native,  Ceylon, . . .          39s.  34s.          5s.     . .  64s.  50s.  14s.     " 

Tea,  common  Congou,. .. .          9d.  7^d.      l;«^d.  ..  Is.  2d.  Is.  Id.  Id.    lb. 

Kice,  Mid.  Bengal, 15s.  12s.           3s.     ..  lis.  9s.  2s.  cwt. 

Indigo,  Mid.  Bengal, 4s.  3d.  3s.  9d.        6d.     . .  8s.  7s.  Is.     lb. 

Saltpetre,  E.  I., 28s.  27s.           Is.     . .  43s.  85s.  8s.  cwt. 

Palm  oil, £34 10s.  £27 10s.       £7     . .  £45  £37  £3  ton. 

Olive  oil, £46  £43           £3     ..  £53  £48  £10    " 

Tallow,  Y.  C, 49s.  478.           2s.      . .  61s.  6d.  52s.  6d.  9s.  cwt. 

Timber, . .              . .  20s. 

The  late  Thomas  Tooke. — Mr.  Tooke,  the  venerable  author  of  the  Jlis- 
tory  of  Prices,  and,  in  many  respects,  for  a  long  period  the  chief  of  living 
economists,  died  at  his  residence,  31  Spring  Gardens,  earl}^  on  the  morn- 
ing of  Friday,  the  26th  February,  1858.  Mr,  Tooke's  age  was  within  a 
few  days  of  the  completion  of  his  85th  year ;  but  it  was  not  until  within 
a  few  months  that  he  manifested  very  sensibly  the  decay  of  powers  to  be 
naturally  expected  at  so  advanced  a  period  of  life.  The  death  of  his  sec- 
ond son,  Mr.  Thomas  Tooke,  junior,  (one  of  the  directors  of  the  Bank  of 
England,)  after  a  very  short  illness,  at  the  close  of  December,  1857,  may 
be  regarded  as  the  more  immediate  cause  of  the  sad  event.  The  sudden- 
ness and  weight  of  the  shock  occasioned  by  so  severe  a  bereavement  as 
the  loss  of  his  son,  exhausted  a  strength  already  impaired  and  failing, 
and  for  two  months  Mr.  Tooke  had  been  gradually  sinking.  But  there 
had  been  no  interval,  even  up  to  the  latest  moment,  during  which  the 
clearness  and  serenity  of  mind  for  which  Mr.  Tooke  was  so  remarkable, 
was  interrupted.  For  a  long  period,  in  the  early  part  of  his  life,  Mr. 
Tooke  was  the  leading  partner  in  one  of  the  largest  houses  engaged  in 
the  Russian  trade.  The  work  which  preceded  the  History  of  Prices  was 
entitled  Thoughts  and  Details  on  High  and  Low  Prices,  and  appeared  in 
1823.  A  second  edition  was  published  in  the  following  year.  The  first 
two  volumes  of  the  History  of  Prices — the  work  upon  which  Mr. 
Tooke's  fame  principally  rests — appeared  in  1838;  two  further  volumes 
appeared  in  1840  and  1847,  and  it  was  only  in  the  spring  of  1858  that 
the  fifth  and  sixth  volumes,  embracing  the  important  period  from  1848 
to  1857,  and  extending,  in  many  respects,  the  scope  of  the  earlier  vol- 
umes, were  published.  In  these  two  closing  volumes,  as  is  well  known, 
Mr.  Tooke  relied  to  a  great  extent  upon  his  coadjutor  and  friend  and  pu- 
pil, Mr.  New^march,  a  coadjutor  who  may  be  justly  said  to  be  in  some 
important  degree  the  representative  of  the  school  of  which  Mr.  Tooke 
was  the  founder.  But  the  active  sphere  filled  by  Mr.  Tooke  was  of 
scarcely  less  interest  than  his  pursuits  as  a  philosopher.    He  was  governor 

*  House  of  Commons  Report,  July,  1858. 


440  History  of  the  Bank  of  England. 

by  re-election  for  several  successive  terms  of  the  Royal  Exchancje  Corpo- 
ration ;  he  was  elected  chairman,  under  similar  circumstances  of  repeated 
choice,  of  the  St.  Katharine's  Dock  Company ;  and  he  was  one  of  the 
earliest  promoters  of  the  London  and  Birmingham  Railway.  lie  con- 
tributed largely  to  the  establishment  of  the  Statistical  Society,  and  to  the 
latest  period  of  his  life  he  never  lost  an  opportunity  of  forwarding  the 
objects  of  that  association.  He  was  a  factory  commissioner  in  the  early 
days  of  the  great  and  difficult  controversy  out  of  which  that  commission 
arose,  and  he  was  the  chairman  of  the  subsequent  commission  relative  to 
the  employment  of  children.  Among  the  last  honors  he  received  was 
the  distinction  of  being  elected  a  corresponding  member  of  the  French 
Academy.  It  is  well  known  that  Mr.  Tooke  was  the  author  of  the  mer- 
chants' petition  of  1820  in  favor  of  free  trade,  and  that,  in  point  of  fact, 
the  free  trade  movement  then  commenced  was  in  a  large  measure  origi- 
nated by  him.  The  petition  itself  is  a  noble  document,  and  every  prin- 
ciple it  sets  forth  has  been  since  made  the  groundwork  of  legislation.  So 
long  as  patience  and  intrepidity  in  the  pursuit  of  truth,  and  the  promo- 
tion, by  his  own  active  example,  of  every  useful  work  can  constitute  a 
claim  to  gratitude  and  respect,  so  long  willthe  name  of  Thomas  Tooke 
fill  a  distinguished  place  in  the  history  of  the  time  in  which  he  lived.* 

The  Year  1859. 

In  December,  1858,  Mr,  Thomson  Hankey,  M.  P.  for  Peterborough, 
and  former  governor  of  the  bank  in  1851  and  1852,  delivered  an  ad- 
dress before  his  constituents,  in  which  he  said : 

"  The  whole  revenue  of  the  government  arising  from  its  daily  receipts 
of  customs,  excise,  post-office,  taxes,  stamps,  <fec.,  no  matter  whether  re- 
ceived in  London,  Cornwall,  the  Hebrides,  or  Galway,  finds  its  way  almost 
immediately  into  the  Bank  of  England,  and  is  thereby  rendered  instantly 
available  for  the  daily  demands  on  the  State.  In  all  these  transmissions 
scarcely  a  sovereign  is  used ;  the  whole  is  effected  by  purely  banking 
arrangements.  The  collector  of  government  may  require  to  transmit 
£50,000  from  Liverpool  to  London  ;  but  some  private  individual  on  the 
same  day  wants  to  remit  £50,000  from  London  to  Liverpool,  through  the 
Bank  of  England,  or  through  some  other  bank ;  both  transactions  are 
carried  out  by  the  mere  entry  in  books,  and  the  advice  or  instructions  sent 
by  the  post. 

"  The  revenue  is  paid  into  the  Bank  of  England  at  the  rate  of  about 
£1,000,000  a  week,  that  is,  in  ordinary  times ;  a  considerable  portion  of 
this  is  allowed  to  accumulate  to  provide  means  on  each  quarter-day  for 
the  payment  of  the  dividends  on  the  government  debt.  Suddenly  on 
those  days  five  or  six  millions  sterling  is  paid  away  by  the  bank  to  the 
public ;  but  the  diff"erence,  as  to  the  abundance  or  scarcity  of  money  just 
before  or  just  after  the  payment  of  this  large  sum  is  scarcely  appreciable, 
so  nicely  do  the  ordinary  operations  of  banking  accommodate  and  render 
easy  all  these  large  transfers  of  money.  And  for  all  this  business  the 
bank  receives  no  other  remuneration  but  the  use  of  the  government  bal- 

*  London  Economist,  March,  1858. 


Hvenis  of  the  Year  1859.  441 

ances,  which  vary  from  '  nil,'  the  day  after  the  payment  of  the  dividend, 
until  they  accumulate  to  the  amount  required  for  payment  of  dividends ; 
and  if  then  there  is  not  sufBcient,  the  bank  is  expected  to  advance  the 
difference,  which  is  repaid  out  of  the  next  accruing  revenue." 

Mysterious  Forgery. — A  letter  dated  Brussels,  October,  1859,  says : 
The  following  curious  circumstance  has  occurred  here  within  the  last 
three  days  : — About  three  years  past  a  respectable  individual  arrived  at 
one  of  the  principal  hotels  at  the  lower  part  of  the  town  from  the  rail- 
way station,  ordered  a  room,  and  deposited  in  it  a  leather  hat-box,  saying 
he  would  return  with  the  rest  of  his  baggage  in  the  course  of  the  even- 
ing. He  did  not,  however,  mate  his  appearance,  nor  has  any  thing  more 
been  heard  of  him,  nor  any  claim  been  made  since  that  period  for  the 
box,  carefully  kept  in  store  by  the  hotel-keeper.  The  latter  hearing,  how- 
ever, of  the  Waterloo  Bridge  murder,  and  suspecting  that  some  mystery 
might  also  be  attached  to  the  box,  decided  upon  having  it  opened  in  the 
presence  of  a  witness,  on  Tuesday,  when,  to  his  infinite  surprise,  he  found 
that  it  contained  sundry  packages  of  English  bank  notes  of  divers  value, 
from  £5  to  £100,  to  the  total  amount  of  £120,000,  all  made  up  in. par- 
cels addressed  to  individuals  at  Marseilles,  Frankfort,  and  elsewhere,  and 
prepared  apparently  for  transmission  by  post.  Upon  seeing  this,  the  ho- 
tel-keeper took  some  of  the  notes  to  a  money-changer  in  the  Rue  des 
Fripiers,  who,  upon  close  inspection,  declared  them  to  be  forgeries  admir- 
ably executed,  especially  those  for  £5,  £10  and  £20.  The  money- 
changer lost  no  time,  consequently,  in  persuading  the  hotel-keeper  to 
deposit  the  box,  with  all  its  contents,  at  his  office,  in  presence  of  police 
agents,  and  forthwith  communicated  the  discovery  and  his  proceedings  to 
the  Bank  of  England  and  to  her  majesty's  resident  vice-consul.  It  is  evident 
that  the  whole  of  these  forged  notes  were  intended  to  have  been  dis- 
patched by  post  to  their  different  destinations,  so  that  the  notes  might 
be  put  in  circulation  simultaneously  and  at  places  far  distant  one  from 
the  other.  The  plan  and  the  notes  were  abandoned  from  causes  unknown  ; 
it  was  supposed  that  the  addresses  on  the  packets  would  probably  afford 
a  clue  to  the  discovery  of  accomplices,  although  the  period  of  those  whole- 
sale forgeries  dates  so  far  back. 

The  Bank  of  England  Note. — In  the  new  Bank  of  England  note,  a 
new  Britannia,  beautifully  devised  and  finely  engraved,  is  used  in  the  place 
of  the  former  vignette,  and  the  writing  on  the  new  note  is  rendered,  *'  I 
promise  to  pay  the  bearer  on  demand,"  instead  of  "  I  promise  to  pay  to 
Matthew  Marshall  or  bearer,"  as  heretofore.  Mr.  Smee,  the  electrician, 
has  proposed  to  the  bank  a  system  whereby  surface  printing  from  elec- 
trotype should  be  substituted  for  the  plate  printing,  and  that,  with  the 
aid  of  other  eminent  artisans,  they  had  succeeded  in  bringing  typography 
into  successful  operation  for  all  the  numerous  forms  of  notes  and  checks 
required.  For  this  purpose,  the  Britannia  was  cut  in  steel,  and  the  let- 
ters produced  in  the  best  possible  state  of  excellence  attainable  by  the 
highest  scientific  skill. 

The  originals  are  never  employed  for  printing,  but  are  simply  used  as 
mould-makers,  from  which  electro-casts  are  taken,  by  the  use  of  the  ordi- 
nary Smee's  battery  and  precipitating  trough.  The  bank  notes  by  this 
system  are  printed  at  a  steam-press,  and  no  less  than  three  thousand  notes 


442  History  of  the  Bank  of  England. 

are  printed  per  liour.  Mr.  Smee  has  demonstrated  that  the  system  pur- 
sued by  the  bank  was  so  perfect,  that  no  forged  note  liad  ever  escaped 
eventual  detection.  By  tlic  new  system,  the  most  perfect  identity  will 
be  insured,  and  the  public  have  only  to  pay  attention  to  the  quality 
of  the  paper  and  the  character  of  the  design  to  protect  themselves.  Mr. 
Smee  states  that  great  importance  is  attached  to  identity  ;  but  further,  he 
considers  that  the  matter  of  inimitability  should  be  classed  with  the 
fanciful  dreams  of  the  jjhilosophcr's  stone  and  the  elixir  of  life  of  a  by- 
gone age — the  same  mechanical  means  of  production  being  substantially 
accessible  to  all. 

On  the  1 5th  of  September,  1 859,  the  proprietors  of  the  Bank  of  England 
held  a  meeting  to  declare  a  dividend.  The  net  profits  for  the  half  year, 
ending  the  31st  August,  were  stated  at  £308,189,  making  the  amount  of 
the  "rest,"  at  that  date,  £3,689,019.  After  payment  of  a  dividend  of 
£4  10s.  per  cent,  for  the  half  year,  free  of  income  tax,  the  "rest"  will 
remain  at  £3,034,134.     A  dividend  at  that  rate  was  accordingly  declared. 

The  following  were  the  comparative  returns  of  circulation  of  the  Bank 
of  England,  September,  1849,  1857,  1859,  with  the  deposits,  coin,  price 
of  consols,  and  rates  of  exchange  : 

Sept.  15, 1849.        Sept.  15, 1857.         Sept.  15, 1859. 

Circulation £  18,701,000  . .  £  19,656,000  . .  £  21,919,000 

Public  deposits, 7,729,000  . .       6,658,000  . .       8,508,000 

Other  deposits, 9,035,000  . .        9,180,000  . .      13,074,000 

Government  securities, 14,334,000  . .     10,593,000  . .     11, 220,000 

Other  securities, 10,403,000  . .      18,064,000  . .      18,957,000 

Resources  of  notes  and  coin, 11,195,000  . .        6,820,000  . .      10,535,000 

Coin  and  bullion, 14,860,000..     11,218,000..      17,120,000 

Bank  rate  of  discount, 3  per  ct.  ..      5^  per  ct.    ..      2^^  per  ct. 

Price  of  consols, 92^  ..            90i         ..            95  J 

Average  price  of  wheat, 43s.  Od.  . .       55s.  8d.     . .       42s.  9d. 

Exchange  on  Paris,  (short,) 25.45  @  25.50  . .  25.17i  @  25  . .         25. 12^ 

on  Amsterdam,  (short,). .  12.2  @  12.21  . .  11.15  @la\  ..  11.14^  @  13 

on  Hamburg,  (3  mos.,). . .  13.13|  . .  13.7f  @  13.8  . .   13.5^  @  13 

The  Bank  and  the  Discount  Houses. — After  the  panic  of  1857,  the 
Bank  of  Enoland,  with  a  view  to  guard  itself  against  unlimited  claims 
for. assistance,  pressed  in  times  of  difficulty  by  the  discount  houses,  de- 
clined to  extend  to  them  the  discount  accommodation,  up  to  that  time  a 
branch  of  the  bank's  business.  It  closed  the  discount  account.  A  pam- 
phlet was  then  published,  suggesting  a  relaxation  of  this  stringent  rule. 
It  was  urged,  that  recent  events,  and  the  modified  pressure  of  January  in 
this  year  and  in  April  of  1858,  have  proved  the  unsoundness  of  the  re- 
striction. It  was  admitted,  "  that  no  bank,  as  at  present  constituted,  can 
possibly  be  expected  to  promise  an  unlimited  amount  of  aid  to  any  one," 
and  it  was  suggested  that  the  bank  should  "convert  them  into  regular 
customers,  by  fixing  a  minimum  and  maximum  account,  to  be  always 
kept  open,  at  a  certain  rate  of  interest,  with  the  plain  understanding, 
that  thev  are  not  at  any  time  to  expect  accommodation  beyond  the  pre- 
scribed limits  as  a  right,  and  that  if  they  have  occasion  at  any  time  to 
apply  for  a  further  temporarj'  advance,  the  granting  of  such  additional 
supply  must  depend  entirely  upon  whether  it  is  quite  convenient  for  the 
bank  to  do  so." 

We  are  not  convinced  by  this  reasoning  of  the  propriety  or  necessity 


The  Bank  and  the  Discount  Houses.  443 

of  resorting  to  the  panic-creating  system,  superseded  in  1857.  It  really 
amounts  to  this :  that  the  discount  houses  desire  to  be  placed  in  the  same 
position  as  the  Bank  of  England  in  a  crisis,  viz.,  a  right  of  appeal,  with 
the  certainty  of  success,  to  a  power  greater  than  their  own,  to  guarantee 
them  against  the  consequences  of  their  own  arts.  How  speculations 
would  grow,  how  transactions,  now  shunned  as  too  speculative,  would  be 
courted,  if  the  discount  houses  were  only  assured  that  their  own  money 
need,  not  go  first.  It  suggests  to  us  to  advise  the  discounters  to  read. 
Major  Downing's  letters,  and  particularly  one,  in  which  the  churn  is 
introduced  to  illustrate  the  currency  difficulty  of  the  house.  "  Well, 
Major,"  says  the  General,  "  he  is  a  plaguy  curious  critter,  arter  all ;  he'll 
make  wheels  turn  sometimes  right  agin  one  another,  yet  he  gets  along ; 
and  when  he  lets  his  slice  fall,  or  some  one  knocks  it  out  of  his  hand,  it 
always,  some  hoiv,  falls  butter  side  up.^^  "Well,"  says  I,  Gineral,  "don't 
you  know  why  ?"  "  Not  exactly,"  says  he,  *'  Major."  "  Well,"  says  I, 
"  I'll  tell  you ;  he  butters  both  sides  at  once,"  says  I.  It  seems  to  us  that 
Major  Do  WANING  understood  Lombard-street  as  well  as  New-York. 

The  Bank  of  England,  being  responsible  for  the  regulation  of  the  rate 
of  discount,  and  consequently  for  the  continued  avoidance  of  the  drain 
of  bullion,  found  its  nicest  calculations  thwarted  by  the  operations  and 
demands  of  the  bill-brokers ;  and  a  very  stern  and  uncommonly  convinc- 
ing case  must  be  made  out  ere  the  bank  can  be  called  upon  to  cancel  its 
ban,  now  found  onerous.  The  transactions  of  the  banking  department 
with  bill-brokers  was  found  to  embarrass  the  circulation  department.  The 
remedy  suggested  is  fallacious.  The  bank  has  no  guarantee  that  it  would 
be  profitable  to  them  in  times  of  prosperity,  whilst  the  certainty  is  before 
them  of  its  being  an  irksome  and  hazardous  risk  in  the  hours  of  a  panic. 
The  discount  houses  should  stand  upon  their  own  bottom.  They  are 
middle-men  between  the  bankers  and  the  merchants.  They  go  the  round 
of  the  bankers  every  morning,  and  borrow  from  those  who  have  to  lend, 
and  lend  to  those  who  want  to  borrow.  What  they  ask  is,  that  they 
should  have  the  privilege  of  re-discounting,  or,  in  other  words,  of  a  large 
addition  to  their  capital  and  their  means  of  operating,  in  excess  of  the 
natural  state  of  the  market,  the  result  of  which  may  be  summed  up  in 
the  momentous  Avord — speculation. 

The  multiplication  of  discount  houses  and  discount  companies  renders 
an  adherence  to  this  rule  of  the  bank  sound  policy.  It  restricts  the 
business  to  the  capital  of  the  firm  or  company,  and  to  the  actual  floating 
capital  available  and  not  required  by  bankers,  and  leaves  the  bank  to 
conduct  its  own  operations  as  free  as  any  other  company.  The  discount- 
ing of  bills  is  part  of  the  business  of  the  banking  department,  in  which 
the  proprietors  are  solely  interested ;  and  no  claim  on  the  bank,  because 
it  is  the  Bank  of  England,  to  force  it  to  alter  its  policy,  by  a  pressure 
from  without,  opposed  to  the  interests  of  its  propriety,  can  be  supported. 

We  are  not  discussing  any  point  inserted  in  the  Bank  Charter  Act ; 
we  have  our  own  opinions,  and  tolerably  strong  ones,  to  be  avowed  as 
occasion  demands  it.  We  simply  refer  to  the  appeal  made  in  the  inter- 
est of  the  discount  houses,  and  can  only  recognise  the  propriety  of  the 
demand  on  the  houses  asking  for  it,  as  accommodation  in  times  of  their 
own  difficulty,  to  be  accompanied  by  a  complete  scrutiny  of  their  aflfairs, 


444  History  of  the  Bank  of  England. 

as  a  just  security  to  the  proprietary,  in  the  same  way  that  a  bank  pushed 
from  imprudent  operations  sought  the  assistance  of  a  more  powerful 
rival.  It  must  be  conceded  experimentally — must  be  denied  on  princi- 
ple ;  and  we  sincerely  trust  that  the  bank  will  adhere  firmly  to  its  wise 
and  stringent  rule.* 

The  London  discount  houses  have  a  grievance  against  the  Bank  of 
England,  which  has  just  been  set  forth  in  a  pamphlet.  The  discount 
office  at  that  establishment  is  closed  to  them,  although  it  is  open  to  all 
the  rest  of  the  community.  Their  exclusion  dates  from  the  panic  of 
1857.  At  that  period,  when  their  transactions,  which  consist  in  borrow- 
ing money  repayable  on  demand,  and  in  lending  it  on  discount  for  fixed 
periods,  ranging  from  one  month  to  six,  had  reached  an  extraordinary 
height,  they  suddenly  found  themselves  unable  to  comply  with  the  run 
upon  their  deposits,  unless  they  could  get  the  Bank  of  England  to  make 
advances  upon  their  assets,  that  is  to  say,  to  re-discount  the  bills  which 
they  thus  discovered  they  had  not  the  means  of  holding.  They  accord- 
ingly rushed  thither,  and,  not  content  with  seeking  such  aid  as  their 
pressing  necessities  rendered  inevitable,  demanded,  in  some  cases,  the 
most  preposterous  assurances  as  to  the  amounts  which  should  be  held  at 
their  service.f 

Henceforth  no  discounts  will  be  granted  to  the  bill-brokers.  If  those 
houses  choose  to  receive  money  at  a  call  to  an  unlimited  extent,  they 
must  themselves  bear  the  responsibility  of  being  at  all  times  prepared  to 
meet  the  engagements  into  which  they  may  enter.  They  will  no  longer 
waive  the  power  of  encouraging  a  redundant  manufacture  of  paper,  relying 
on  their  immediate  ability,  in  times  of  sudden  pressure,  to  throw  the  onus 
of  any  difficulty  on  the  Bank  of  England,  and  rendered  confident  as  to 
their  ultimate  position  by  the  endorsements  of  joint-stock  banks,  and  the 
consequent  unlimited  commitment  of  a  multitude  of  infatuated  sharehold- 
ers. It  is  plain  the  practice  of  the  Bank  of  England  in  re-discounting  for 
the  bill-brokers  was  just  as  inherently  vicious  as  that  of  the  bill-brokers 
re-discounting  for  the  joint-stock  banks.  It  is  true  the  Bank  of  England 
have  always  exercised  much  greater  vigilance  with  regard  to  the  character 
of  any  paper  brought  to  them  than  was  thought  necessary  by  the  estab- 
lishments in  question,  but  that  makes  no  difference  as  regards  the  prin- 
ciple at  stake ;  and  no  one  can  doubt,  that  if  the  promoters  of  the  late 
crisis  had  known  from  the  first  that  a  resort  to  the  Bank  of  England,  to 
cover  the  consequence  of  their  own  want  of  prudence,  had  been  impos- 
sible, the  commercial  delinquencies  fostered  through  so  many  years  would 
never  have  been  encountered.  In  relation,  also,  to  advances  on  bills,  an 
equally  proper  and  stringent  course  is  to  be  adopted.  Hitherto  it  has 
been  common,  not  only  to  discount  for  the  money  lenders  bills  not  hav- 
ing more  than  three  months  to  run,  but  also  to  make  advances  for  a  fort- 
night, or  shorter  periods,  on  bills  maturing  at  any  time  within  six  months. 
The  one  is  to  be  discontinued  as  well  as  the  other. 

The  following  table  exhibits  the  highest  and  lowest  amount  of  coin 
and  bullion  held  by  the  Bank  of  England  each  year  since  the  new  charter 
of  1844,  and  also  the  bank  circulation  of  England,  Scotland  and  Ireland  : 

*  London  Bankers'  Circular,  February,  1860.  f  London  Timet. 


Currency  Statistics  of  Great  Britain. 


445 


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29 


446 


History  of  the  Bank  of  England. 


The  lowest  and  highest  prices  of  the  leading  funds  in  the  year  1859 
were  as  follow  : 


Yeae  1859. 


Januaet. 

Low-      High- 
est,        eat. 


Consols, 

Exchequer  bills, 

Bank  stock, 

Discount, 

Buenos  Ayres,  6  per  cent., . 
Chilian,  6 

3         "  . 

Dutch,  4         " 

2i       " 

Mexican, 

Peruvian,  4^  per  cent , 

3  "  

Russian,     5         "  . . . . 

4i       "  

Sardinian,  5  "  . . . . 
Turkish,     6         "  

4  "  

Kail-ways. 

Caledonian, 

Eastern  Counties, 

Great  Northern, 

Great  Western, 

Lancashire  and  Yorkshire,. . 

London  and  Brighton, 

London  and  North  Western, 
London  and  South  Western, 

Midland, 

North  Eastern,  Berwick, , . , 

South  Eastern, 

East  Indian, 

Great  Indian,  Peninsular,. . . 
Grand  Trunk,  Canada,  .  . . . 
Great  Western,  Canada,. ... 


34s.  p 
225 

80i 

76 
lOOJ 
C5J 
19 
89 

ni 

112| 

99 

84  i 

88| 
105i 


96| 
,  438.  p. 
229 
21 
86 
104  i 

102 

66 

20i^ 

93 

73 
114 
101^ 

92 
106i 


December. 

Low-      Uigh- 
est.         eat. 

96f   97f 
283.  p.  32s.  ID. 
226   228 

11         83 
104   105 

99f  loi^ 
64^   66i 
22|   23 
92} 
70| 
110 
101 
84i   86 
76|   79 
103t  104^ 


DUEINO  THE   YbAB. 


70 
109 
100 


Low- 
eat. 

88i 

5s.  p. 
215 
2i 

71 

95 

68 

86 

56 

15^ 

80 

60 
100 

87 

65 

67 

98 


nigh- 
eat. 

971 

43s.  p. 
231 
4* 

86 
105i 

78i 
102i 

67 

24| 

95i 

75 
114 
lOH 

94 
106i 


84| 
61i 

104} 
54| 
95f 

109i 
94| 
92J 

101 
92} 
73} 

101} 

102 
3.3 
16 


m 

64| 

107i 

58J 

99| 

114 

98f 

95i 

104| 

95f 

76} 

109 

108i 

37i 

17 


9H 
56} 

104i 
66| 
98f 

113 
97 
96i 

107} 
93f 
80} 

102 
99 
37f 
12f 


95 

59j 
108 

70f 
lOOf 
115} 

99} 

98| 
llOf 

95| 

85 
104 
102 

44 

131- 


69} 
49 
93 
455 
83 
104 
83 
84 
90 
81 
59 
88 
90 
28 
12f 


95 

64f 
108 

70f 
lOOf 
115} 

99} 

98f 
1101 

95f 

85 
109 
108i 

44 

17 


New  Loans  in  Europe,  Year  1859. — The  following  is  an  account  of 
the  various  loans  introduced  at  the  London  market  during  the  year 
1859: 

Jan.  8. — £1,000,000  Victoria  six  per  cent,  railway  debentures,  at  107 
and  upward. 

Feb.  1. — £6,000,000  Austrian  five  per  cents,  at  80,  only  a  small  pro- 
portion subscribed. 

April  21. — £5,077,000  Indian  four  per  cent,  debentures,  at  95  and  up- 
ward. This  loan  was  intended  to  be  for  £7,000,000,  but  the  biddings  at 
and  above  the  minimuin  reached  only  £5,077,000. 

Aug.  12. — £12,000,000  Russian  three  per  cents,  at  66|^,  stated  to  have 
been  fully  subscribed  in  London  and  on  the  continent,  but  subsequently 
believed  to  have  been  taken  only  to  the  extent  of  half  or  two-thirds  ; 
Russian  officials  having  nominally  subscribed  for  the  remainder. 

Aug,  23. — £4,000,000  India  five  per  cent,  stock,  at  97  and  upward. 
For  this  loan  there  was  a  large  excess  of  applications. 


Events  of  the  Year  1860. 


447 


Oct.  25. — £423,000  Victoria  six  per  cent,  railway  debentures,  at  108 
and  upward.  In  addition  to  this  issue,  about  £500,000  is  believed  to 
have  been  sold  at  intervals  by  private  contract. 

Dec.  5. — £620,000  TurMsli  six  per  cents,  at  62^.  During  the  year, 
France  has  raised  a  home  loan  of  £20,000,000  in  three  per  cents,  nomi- 
nally at  60|-,  but  reckoning  allowances,  at  59|-.  Austria  also  has  raised 
£20,000,000  at  Vienna,  and  £7,000,000  in  Lombardy,  besides  resorting 
to  a  surreptitious  issue  of  £12,000  at  Vienna.  Russia  issued  £4,500,000 
five  per  cents  at  95,  and  the  various  minor  German  powers  came  forward, 
for  small  amounts.  Sardinia  obtained  £1,200,000  from  the  National 
Bank  at  Turin,  and  £4,000,000  from  the  public.  On  the  other  hand, 
Denmark  has  paid  off  £697,200,  the  balance  of  a  loan  of  £800,000,  con- 
tracted in  London  in  1849.  With  regard  to  our  own  national  debt. 
£2,000,000  of  exchequer  bonds  were  paid  off  at  maturity  in  May  last. 
Annuities  to  the  amount  of  £306,000  per  annum  ceased  in  October,  and 
shortly  the  securities  known  as  long  annuities  will  expire,  thus  effecting 
an  additional  yearly  economy  of  £1,599,500. 

The  Year  1860. 

The  British  copper  coinage  is  executed  by  private  parties  under  con- 
tract. Of  the  English  copper  coinage,  beginning  in  1805  and  ending  in 
1808,  Messrs.  Boulton  and  Watt  produced — of  pence,  361  tons ;  of 
half-pence,  693  tons ;  and  of  farthings,  22^  tons.  Of  the  Irish  copper 
coinage,  commencing  in  1805  and  terminating  in  1806,  the  same  firm 
supplied  151  tons  of  pence,  467  tons  of  half-pence,  and  21  tons  of  far- 
things ;  giving  a  grand  total  of  copper  coins  furnished  by  the  presses  of 
contractors  between  1797  and  1808  of  something  over  3,500  tons,  or 
above  300,000,000  individual  pieces  of  all  denominations.  Subjoined 
are  fac  similes  of  the  obverse  and  reverse  of  the  new  mixed  metal  coins 
issued  in  1860 : 

The  New  Bronze  Penny  (actual  size.) 


The  metal  of  which  they  are  composed  is  a  species  of  bronze,  contain- 


ing; 


Copper, 95  parts. 

Tin, *      " 

Zinc, 1      " 


448  History  of  the  Bank  of  England. 

The  popular  tradition  tliat  the  personification  of  Britannia  was  origin- 
ated by  Charles  II.  is  erroneous.  On  the  Roman  Imperial  coinage  of 
Antoninus  Pius,  who  died  A.  D.  161,  we  find  a  female  figure  seated  on 
a  globe  surrounded  by  waves,  in  her  right  hand,  a  standard,  in  her  left  a 
javelin,  her  elbow  reclining  upon  the  edge  of  a  large  buckler  by  her  side  ; 
in  the  exergue  "  Britan."  The  figure  is  supposed  to  typify  the  subjugated 
province,  and  well  illustrates  the  lines  of  Virgil  :  "  Ut  penitus  tola  divi- 
sos  orbe  BritannosJ^  It  is  true,  however,  that  in  Charlks  II.'s  reign, 
after  an  interval  of  1,500  years,  the  Britannia  re-appeared  on  the  copper 
coinage  of  England.  1*hilip  Roetier  is  said  to  have  been  the  engraver, 
and  to  have  introduced  the  likeness  of  Miss  Stewart,  afterwards  Duchess 
of  Richmond,  in  the  figure  of  Britannia. 

At  the  Bank  of  England,  September  6th,  1860,  the  court  of  directors 
ordered  a  gratuity  of  10  per  cent,  on  the  salaries  of  all  the  clerks  who 
had  been  in  the  establishment  more  than  two  years.  They  likewise 
ordered  a  gratuity  of  ^£1,000  each  to  Mr.  Gray  and  Mr.  Marshall,  the 
chief  accountant  and  chief  cashier,  with  a  complimentary  acknowledg- 
ment on  their  having  respectively  completed  fifty  years  of  service.  Bank 
officers  are  sufficiently  paid  for  their  labor,  in  the  United  States,  but  not 
for  the  heavy  responsibilities  they  assume. 

A  half-yearly  court  of  the  Bank  of  England  took  place  September  13th, 
Mr.  Bonamy  Dobree,  the  governor,  presiding.  The  net  profits  in  the  six 
months  ending  the  31st  of  August  were  stated  to  be  £710,143,  making 
the  "rest"  on  that  day  £3,736,139;  out  of  which,  a  dividend  for  the 
half-year  was  declared  at  the  rate  of  five  per  cent.,  free  of  income  tax. 
The  '*  rest"  then  stood  at  £3,008,489.  In  reply  to  a  question,  it  was 
mentioned  that  the  large  increase  in  the  "  rest"  shown  in  the  last  account 
arises  from  tlie  usual  addition  at  the  end  of  the  half  year  of  the  circu- 
lating accruing  interest  on  the  numerous  investments  held  by  the  bank. 

Decimal  Coinage. — The  question  of  decimal  coinage  was  shelved,  for 
the  present,  by  the  final  report  of  the  royal  commission,  dated  on  5th 
April,  1859.  The  conclusions  oflfered  do  not  appear  to  have  been  unani- 
mously, or  even  harmoniously  arrived  at;  the  document  itself  is  not 
signed  by  the  chairman,  Lord  Monteagle,  formerly  better  known  as  Mr. 
Spring  Rice,  and  for  a  good  while  chancellor  of  the  exchequer;  and  it 
is  followed,  in  individual  explanation  or  justification,  by  a  very  much 
longer  paper,  entitled  a  draft-report,  by  Lord  Overstone,  also  better 
known  as  the  senior  of  Jones,  Lloyd  &  Co.,  and  by  a  memorandum  of 
Mr.  J.  G.  Hubbard,  now  M.  P.  The  result  had  been  anticipated  for 
some  time  before  the  report  was  in  circulation,  and,  indeed,  before  it  was 
written.  Not  that  the  advocates  for  decimal  coinage  had  urged  their 
views  with  feebleness,  either  of  logic  or  of  expression ;  on  the  contrary, 
they  argued  with  a  certain  fierce  fervor,  and  frequently  with  considerable 
force;  and,  without  any  invidious  comparisons,  a  dispassionate  reader 
would  most  likely  think  that  the  weight  of  sagacious  and  learned  author- 
ity preponderated  in  their  favor.  On  the  other  side,  they  were  met  by 
singular  ingenuity,  industry  and  perseverance;  arguments  the  most  plau- 
sible and  affecting  to  the  British  ear — those  drawn  from  the  embarrass- 
ments of  change  and  the  disturbance  that  novelties  always  cause — are 
adduced  in  remarkable  variety  and  repetition ;  and  the  inertia  (so  to 


Decimal  Weights  and  Measures,  and  Coinage.  449 

speak)  of  the  actual  system  of  money  and  accounts  was  skilfully  invoked 
both  to  shelter  its  defenders  and  multiply  the  toil  of  its  assailants.  This 
position  as  defenders  gave,  besides,  the  advantage  of  unity  of  purpose 
and  consistency  of  eflfort ;  and  the  advantage  was  still  further  heightened 
(whether  accidentally  or  not)  by  the  interest  which  one  of  the  commis- 
sioners, Lord  OvERSTONE,  took  in  the  question,  and  the  active  leadership 
he  assumed,  to  such  a  degree  as  to  give  to  the  whole  institution  very 
much  the  aspect  of  a  commission  for  preventing  the  adoption  of  a  deci- 
mal system.  Almost  simultaneously  with  his  appointment,  he  issued  a 
series  of  more  than  threescore  questions,  bearing  quite  plausibly  in  favor 
of  the  actual  system  ;  a  respectably  sized  volume  was  published  under  his 
auspices,  containing  extracts  from,  or  reprints  of  old  and  forgotten  essays 
on  currency  and  coinage ;  and  the  final  report  itself  is  accompanied  with 
an  analysis  of  more  or  less  of  the  testimony  that  had  been  collected, 
made  at  his  instance  by  one  of  the  witnesses,  who,  besides  the  opportu- 
nity of  refreshing  his  own  testimony,  was  thus  indulged  with  an  occasion 
for  criticising  that  of  every  one  else.  The  decimalists,  on  their  side,  ap- 
pear to  have  been  wholly  without  such  (or  any)  inspiriting  and  cloud- 
compelling  guidance ;  the  piquancy  of  the  subject  seems  to  have  stimu- 
lated, chiefly,  the  faculty  of  invention ;  and  every  one,  nearly,  of  the  two 
hundred  authors  who  wrote  in  favor  of  a  change,  fought,  like  Harry  of 
the  Wynd,  "  for  his  own  hand."  The  whole  number  of  literary  contri- 
butions which  the  discussion  called  forth,  ranging  from  elaborate  articles 
in  daily  newspapers  and  journals  of  rarer  issue,  up  to  portly  volumes,  ex- 
ceeds that  of  the  days  in  a  calendar  year  ;  and  hardly  more  than  a  fourth 
part  of  this  mass  is  anti-decimalist.  It  would  be  obviously  an  enormous 
task,  as  it  would  be  an  unwelcome  and  unprofitable  one,  to  attempt  any 
detailed  analysis  of  such  a  mass;  and  what  follows  will  be  a  mere  indica- 
tion of  the  more  important  steps  which  have  marked  the  progress  of  the 
proposed  measure. 

In  consequence  of  the  policy  adopted  towards  the  brokers  or  bill  dis- 
counters in  1859-1860,  an  attempt  was  made  in  April,  1860,  by  Messrs. 
OvEREND,  GuKNEY  &  Co.,  to  force  the  bank  into  a  return  to  their  former 
policy.  A  report  to  the  House  of  Commons  showed  that  the  reserve  of 
notes  in  the  banking  department  had  decreased,  between  the  4th  of  April 
and  the  11th  of  April,  1860,  from  £6,842,000  to  £4,922,000;  and  the 
magnitude  of  the  change  naturally  excited  much  remark.  The  paper  laid 
before  Parliament  proves  that  almost  the  whole  of  that  decrease  was 
caused  by  a  large  increase  of  £1,000  notes.     The  figures  are  these  : 

Return  of  Bank  Notes  issued  bt  the  Issue  Department  of  the 
Bank  of  England. 

On  April  4, 1860.  On  April  11, 1860. 

^£5  notes, £7,261,000         a7,340,000 

£10  notes, 4,387,000         4,413,000 

£20  to  £100  notes 6,672,000         6,536,000 

£200  to  £500  notes, 1,598,000         1,593,000 

£1,000  notes, 1,927,000         3,585,000 

Notes  held  by  the  public, 21,845,000         23,467,000 

Notes  held  by  the  bank, 6,842,000         4,922,000 


450  History  of  the  Bank  of  England. 

Now,  as  £1,000  notes  are  a  kind  of  circulation  very  rarely  nsed,  it  was 
evident  that  some  peculiar  agency  must  have  been  in  operation ;  and  it 
was  ascertained  that  the  house  of  Overend,  Guuney  &  Co.  took  from  the 
bank  about  £1,050,000,  and  placed  it  in  their  own  coffers.  Of  course,  to 
this,  in  itself,  the  public  could  have  no  objection.  The  money  was  theirs. 
The  payment  of  the  dividends  had  given  them  an  unusual  command  of 
money,  and  if  they  distrusted  the  solvency  of  the  bank,  or  for  any  other 
reason  thought  it  safer  to  keep  their  own  cash  in  their  own  till,  it  would 
not  be  becoming  in  others  to  remark  on  it,  still  less  would  it  be  proper 
for  us  to  write  about  it.  But,  as  Mr.  Gladstone  observed,  the  firm  in 
question  do  not  desire  that  their  course  of  conduct  should  be  kept  a  se- 
cret ;  they  say  that  they  adopted  it  on  public  grounds,  and  wish  it  to  be 
subjected  to  public  discussion.  Their  object  was  a  very  simple  one. 
There  had  been  an  unceasing  dispute  for  some  months  between  tiie  bill- 
brokers  and  the  Bank  of  England,  in  consequence  of  the  rule  which  ex- 
cludes the  brokers  from  the  discount  office  of  the  bank.  The  greatest 
bill-broking  house  in  London  desired  to  put  an  end  to  this  if  possible; 
they  wished  to  show  the  bank  how  strong  they  were — how  much  money 
they  had  control  over — how  much  they  could  withdraw  at  a  critical  in- 
stant. Accordingly,  they  took  advantage  of  a  moment  at  which  it 
seemed  likely  the  bank  reserve  would  be  less  than  it  had  ever  been  since 
the  end  of  the  panic  of  1857,  and  at  which  they  themselves  happened  to 
have  rather  more  spare  money  than  usual ;  they  withdrew  the  whole  of 
it  from  the  bank.  AVhat  has  been  the  result  ?  We  find  from  the  return 
of  this  week  that  the  "  great  house"  have  put  their  money  back  again. 
We  are  not  aware  that  they  have  gained  any  thing;  that  they  have 
brought  their  lamentable  dispute  with  the  bank  nearer  to  a  conclusion ; 
that  they  have  elucidated  any  thing  or  accomplished  any  thing.  They 
have,  indeed,  shown  their  power.  But  every  one  knew  that  Messrs. 
Overend  &  Co.  dealt  with  millions,  and  to  deal  with  millions  is  a  great 
power.  And,  though  they  have  not  gained  any  thing  themselves,  they 
certainly  did  some  harm  to  the  public  ;  they  caused  some  days'  uneasi- 
ness. So  large  a  reduction  in  the  reserve  of  notes  could  not  but  create 
some  anxious  feeling,  even  if  the  cause  had  been  known,  but  at  first  it 
was  only  known  vaguely.  There  were  rumors  of  a  "  conspiracy  among 
money-dealers,"  and  firms  which  had  no  concern  in  what  had  been  done 
were  said  to  have  participated  in  doing  it.  So  extraordinary  a  course  of 
conduct  adopted  by  such  persons,  under  sucb  circumstances,  could  not 
but  cause  some  degree  of  anxiety.  We  have  very  lately  expressed  our 
views  at  length  on  the  merits  of  the  dispute  between  the  bank  and  the 
bill-brokers,  and  we  need  not  recur  to  that  subject  at  present.  We  can 
only  regret  that  what  has  occurred  is  likely  to  embitter  the  discussion 
between  them.  The  Bank  of  England  cannot  afford  to  be  frightened ; 
Messrs.  Overend  &  Co.  have,  in  simple  English,  attempted  to  frighten 
them.  A  firm  in  such  credit  as  Messrs.  Overend  cannot  like  to  fail  in  so 
marked  a  manner;  and  yet  they  have  replaced  their  money,  and  all  goes 
on  as  before.* 

The  Bank  of  France. — The  operations  of  the  Bank  of  France  for  the 

*  London  Economist. 


The  Bank  of  France. 


451 


ten  years,  1846-1856,  show  a  vastly  augmented  commerce  throughout  the 
empire,  greater  activity  in  her  manufacturing  system,  and  enlarged  wealth 
among  the  people.  The  Emperor  alludes  to  this  in  the  opening  of  his 
speech  of  the  Yth  February  :  "  France  has,  as  you  are  aware,  during  the 
last  six  years,  seen  her  welfare  augment,  her  riches  increase,"  &c.  So  far 
as  these  changes  are  indicated  and  confirmed  by  the  movements  of  the 
Bank  of  France,  there  can  be  no  doubt  of  renewed  prosperity  throughout 
the  empire.  The  bank  was  allowed  in  1856-'5'7  to  double  her  capital,  or 
from  91,250,000  francs  to  182,500,000  francs.  Upon  this  capital,  equiv- 
alent to  36  millions  of  dollars,  the  bank  has  added  largely  to  its  indi- 
vidual deposits  (say  twenty-five  per  cent.)  since  Ma}',  1856.  The  follow- 
ing is  a  recapitulation  of  the  circulation,  loans,  specie  reserve,  dividends, 
and  market  value  of  shares  of  the  Bank  of  France  for  each  year,  1846- 
1856: 


Amount  of 
Loans. 


Tear.  Francs. 

1846, 1,018,957,841 

1847, 1,808,246,438 

1848, 1,643,728,634 

1849, 1,025,666,213 

1850, 1,176,423,896 

1851, 1,241,412,880 

1853, 1,824,469,438 

1853, 2,842,930,205 

1854, 2,944,643,591   . .  193,937,000 

1855, 3,762,000,000  ..     99,000,000 

1856, 4,674,000,000  ..     81,000,000 


Gold. 
Francs. 

6,800,000 

440,000 

4,700,000 

4,600,000 

11,980,000 

82,260,000 

68,936,000 

103,598,000 


Silver. 
Francs. 

94,282,000 
169,060,000 
248,600,000 
429,270,000 
446,840,000 
486,460,000 
434,974,000 
219,482,000 
198,723,000 
100,000,000 
109,900,000 


Total. 
Francs. 

101,082,000 
169,500,000 
253,300,000 
433,370,000 
458,820,000 
568,720,000 
503,910,000 
323,080,000 
392,660,000 
199,000,000 
190,000,000 


Dividend  nighest 
per       2)riC6  of 


Share. 
Francs. 

..  159 
..  177 
..  75 
..  106 
..  101 
. .  105 
..  118 
..  154 
..  194 
..  200 
..   272 


Share. 
Francs. 

..  3,505 

..  3,600 

..  3,230 

..  2,500 

..  2,425 

..  2,650 

..  3,108 

..  2,950 

..  3,000 

..  3.300 

..  4,075 


ClKCULATION. 


Year. 

1848,.. 
1849,.. 
1850,.. 
1851,.. 
1852, . . 
1853,.. 
1854,.. 
1855,.. 
1856,.. 


Notes  of 
5,000  Francs. 

.    1,120,000  ., 

.    1,145,000  . 

530,000  . 

.       120,000  . 

490,000  . 

290,000  . 

90,000  . 

.       120,000  . 

50,000  . 


Notes  of 
1,000  Francs. 

.  210,000,000  . 
.  270,050,000  , 
.  287,868,000  , 
.  372,051,000 
.  428,012,000 
.  419,232,000 
.  403,649,000 
.  381,991,000 
.  371,505,000 


Notes  of 
500  Francs. 

.  72,000,000  . , 
,  68,330,000  . 
.  89,174,00-0  . 
.  90,198,000  . 
.  96,053,000  . 
.  87,003,000  . 
.  76,707,000  . 
.  72,744,000  . 
.  69,954,000  . 


Notes  of 
200  Francs. 
.  55,000,000  . 
.  49,075,000  . 
.  57,318,000  . 
.  53,890,000  . 
.  84,663,000  . 
.  74,767,000  . 
.  79,221,000  . 
.  74,747,000  . 
.  72,704,000  . 


Notes  of 
100  Francs. 

.  71,000,000  , 
.  42,422,000 
.  46,632,000 
.  66,781,000 
.  78,167,000 
.  62,988,000 
.  75,303,000 
.  80,416,000 
.  95,927,000 


Total  of 
Circulation, 
.  409,120,000 
.  431,022,000 
.  481,552,000 
.  583,040,000 
.  689,910,000 
.  644,280,000 
.  636,970,000 
.  612,237,000 
.  612,332,000 


The  par  value  of  the  shares  of  the  Bank  of  France  is  1,000  francs. 
These  have  sold  of  late  years  from  2,425  to  4,075  francs  per  share, 
equivalent  to  about  200  per  cent,  advance.  They  have  held  much  higher, 
viz, :  » 


Francs. 

In  1847, 3,600 

In  1848, 3,230 

In  1849, 2,500 

In  1850, 2,425 

In  1851, 2,650 


Francs. 

In  1852, 3,108 

In  1853, 2,950 

In  1854, 3,000 

In  1855, 3,.S00 

In  1856, 4,075 


Up  to  1857,  the  smallest  denomination  of  notes  issued  by  the  Bank  of 
France  was  one  hundred  francs.  In  that  year  bills  of  fifty  francs  were 
authorized.  The  circxalation  is  more  largely  in  l,000f.  bills  than  in  any 
other;  a  marked  contrast  with  the  condition  of  bank  issues  in  the  United 
States. 


452 


History  of  the  Bank  of  England. 


Revieiv  of  the  Year. — Throughout  the  whole  year  1860  the  extreme 
range  of  consols  was  3f  per  cent.,  that  of  the  preceding  year  having  been 
8f,  while  in  1858  it  was  5  per  cent.  The  highest  price,  95|^,  was  touched 
on  the  4th  of  January,  and  the  lowest,  92|^,  on  the  first  of  December. 
The  difference  between  the  opening  and  closing  quotations  of  the  year 
shows  a  decline  of  d^.  In  railway  shares  the  average  range  of  fluctua- 
tions was  about  15  per  cent.,  while,  instead  of  a  decline  being  established, 
as  in  consols,  there  has  been  an  average  improvement  of  about  10  per 
cent,  of  the  bank  bullion,  its  amount  at  the  beginning  was  ^£1 6,460,824  ; 
it  reached  £16,552,030  on  the  27th  of  June,  and  declined  to  £12,798,119, 
its  lowest  point,  at  the  end  of  the  year.  At  the  Bank  of  France  the  total 
at  the  commencemcn't  was  £23,200,000,  while  it  is  now  £17,300,000, 
showing  a  loss  of  £5,900,000  during  the  year.  On  the  Paris  Bourse  the 
fall  in  French  rentes  has  been  If  per  cent.  With  respect  to  the  declared 
value  of  British  exportations,  the  board  of  trade  tables,  for  eleven  months 
of  the  year,  show  a  total  of  £123,714,276,  against  £119,613,185  in  the 
corresponding  period  of  1859,  being  an  increase  of  £4,101,091,  or  3^  per 
cent.,  while  it  exceeds  by  7^  per  cent,  the  total  of  1857,  the  great  year 
of  inflation.  The  changes  in  the  bank  rate  of  discount,  which  were  five 
in  number  in  1859,  were  eleven  in  1860.  On  the  first  of  January,  the 
rate  was  2|-  per  cent.,  whence  it  was  gradually  advanced  to  5  per  cent. 
It  then  went  back  to  4  per  cent.,  but  reached  6  per  cent,  on  the  15th  of 
November,  and  is  now  again  at  that  point,  after  a  temporary  reduction  to 
5  per  cent.  In  the  cotton  market  there  had  been  great  steadiness ;  the 
price  of  fair  Orleans,  at  the  commencement,  was  about  7fd.  per  lb.,  and, 
after  ranging  between  that  price  and  8d.,  it  has  closed  at  7|-d.  to  8d.  In 
the  wheat  market  the  movement  has  been  large,  and  almost  constantly 
upwards ;  Norfolk,  which  was  quoted  at  41s.  to  42s.  in  January,  having 
advanced  to  64s. 

The  stock  values  of  the  year  were  as  follow : 


Fluctuations,  1860. 

Consols, 

Excliequer  bills, 


Brighton  Railway, 

Caledonian, 

Eastern  Counties, 

Great  Northern, 

Great  Western, 

London  and  North  Western, 

Midland, 

Lancashire  and  Yorkshire,. . 

Sheffield, 

South  Eastern, 

South  Western, 

North  East — Berwick, 

North  East— York 

Lombard — Venetian, 

East  Indian 


Price  on 

lat  Jdn., 

1860. 

95f  to  95f  , 
SOs.prem.  , 

llli 
95 

m 

107i 

70 

99 
llOi 
lOOf 

39i 

84i 

98i 

95i 

1H 
2|  prem. 
lOU 


Price 

SUt  Dec, 

1860. 

92ito92| 
23.  dis. 

118 

97i 

53i 
108 

73| 
lOli 
135i 
1181 

55 

m 

95 
104| 
95 
H  dis. 


Lowest 
Price, 

1860. 


6s.  dis. 

109i 

89 

50| 
103 

59i 

95i 
105f 

97i 

S7f 


91i 

75i 

l|  dis. 
98^- 


Highest 
Price, 
1860. 

95| 

333.  prem. 

118i 

99^ 

58f 
119 

75f 
104| 
1361 
12H 

m 


105f 
95f 
2f  prem. 
103i 


Subjoined  is  a  summary  of  the  principal  financial  and  commercial 
events  of  the  year  1860,  in  England  and  on  the  continent : 


Financial  Events  in  Europe,  1860.  453 

January  1.  Consols,  95f ;  French  three  per  cents,  68f.  90c.  Pro- 
posals put  forth  by  Messrs.  Baring  &  Glyn,  on  behalf  of  government  of 
Canada,  to  convert  the  various  debts  of  the  province,  amounting  to 
£11,661,010,  into  a  consolidated  five  per  cent,  stock,  irredeemable  for 
twenty-five  years.  This  arrangement  involved  the  payment  of  certain 
old  bonds,  and  an  issue  of  £2,800,000  new  ones  on  the  London  market ; 
the  whole  of  which  were  rapidly  subscribed  ;  the  applications  having 
reached  about  £22,000,000.  3.  Announcement  of  peace  between  Buenos 
Ayres  and  the  other  States  of  the  Argentine  Republic.  Buenos  Ayres 
six  per  cents,,  82,  whence  they  have  since  steadily  advanced  to  96:|-. 
Mexican  bonds  quoted  23.  Prospectus  issued  of  the  Bank  of  Turkey. 
News  of  treaty  concluded  by  Mr.  M'Lane,  the  United  States  envoy  in 
Mexico,  and  the  Juarez  government  in  Vera  Cruz.  The  treaty  failed  to 
obtain  ratification  at  Washington.  12.  Notice  from  the  colony  of  Vic- 
toria, fixing  the  issue  of  Victoria  railway  debentures,  in  1860,  at 
£3,000,000.  16.  Commercial  manifesto  of  the  French  emperor.  Con- 
sols firm.  17.  New  Belgian  loan  of  £1,800,000  introduced  at  Brussels 
at  95^.  19.  Encouraging  report  published  of  Grand  Trunk  Railway  of 
Canada,  from  Mr.  Blackwell,  its  vice-president  and  manager,  on  opening 
of  Victoria  Bridge.  Bank  rate  of  discount  raised  from  2|^  per  cent.,  at 
■which  it  had  stood  for  six  months,  to  3  per  cent.  Consols,  %h\.  26. 
Outline  of  treaty  of  commerce  with  France  published  in  the  Patrie. 
Cape  of  Good  Hope  six  per  cent,  government  debentures  for  £50,000 
adjudicated,  at  prices  varying  from  105^  to  108|^.  31.  Bank  bullion  re- 
duced to  £14,542,502,  or  £1,918,322  less  than  on  the  1st  of  January, 
owing  chiefly  to  continuous  purchases  by  the  public  of  the  Indian  rupee 
debt  and  other  Indian  securities.  Bank  discount  advanced  from  3  per 
cent,  to  4  per  cent.     Consols,  94. 

February  1.  Silver  discoveries  at  the  Washoe  mines  announced  from 
California.  10.  Budget  of  the  chancellor  of  the  exchequer,  showing  an 
estimated  charge  of  £70,000,000,  and  a  surplus  of  £464,000.  The  di- 
minution of  revenue  was  estimated  at  £1,000,000  from  the  French  treaty, 
and  £1,900,000  from  the  abolition  of  customs  and  excise  duties,  includ- 
ing that  on  paper.  On  the  other  hand,  new  imposts  and  savings  were  to 
yield  £982,000.  The  balance  from  alterations,  therefore,  showed  a  net 
loss  to  revenue  of  £2,108,000.  An  increase  of  the  income  tax  from  9c?. 
to  lOd.,  and  an  alteration  in  the  collection  of  it,  so  as  to  force  an  addi- 
tional quarter  into  the  current  year ;  a  shortening  of  the  malt  and  hop 
credits,  and  a  renewal  of  £1,000,000  exchequer  bonds  maturing  in  No- 
vember, were  the  main  resources  adopted  to  restore  the  account  and  to 
furnish  the  surplus  promised.  Intelligence  from  India  that  a  government 
issue  of  notes  had  been  resolved  upon — the  first  emission  to  be 
£5,000,000,  but  future  issues  to  be  made  without  other  limit  than  the 
necessity  of  holding  a  sum  equal  to  one-third  of  the  amount  in  bullion. 
The  latter  part  of  this  proposal  was  subsequently  disallowed  by  Sir  C. 
Wood.  Introduction  of  a  bill  by  the  Railway  Companies'  Association,  to 
enable  railways  to  escape  the  liabilities  of  the  common  carriers'  act.  An 
analogous  movement  had  been  made  by  the  Great  Western  Company,  in 
1859,  but  without  success,  and  the  present  measure  ultimately  shared  the 
same  fate. 


454  History  of  the  Bank  of  England. 

March  11.  Improvements  in  India  rupee  paper,  on  definitive  statement 
from  Calcutta,  that  no  furtlier  loans  would  be  required,  and  that  the  de- 
ficit for  tlie  current  year,  to  be  made  up  by  new  taxes,  would  be  only 
£900,000.  Rupee  five  per  cents,  99f ;  five  and  a  half  per  cents,  105^. 
15.  Half-yearly  court  at  Bank  of  England  ;  dividend  of  4^  per  cent,  de- 
clared ;  leaving  the  rest  £3,025,991.  16,  Introduction  of  new  bank- 
ruptcy bill,  containing  five  hundred  and  twenty-nine  clauses,  by  the 
attorney-general — subsequently  abandoned.  18.  Brazilian  four  and  a 
half  per  cent,  loan  for  £1,373,013,  introduced  by  Messrs.  Rothschild,  at 
90,  or  £88  3s.  8d.,  reckoning  dividend,  &c.  20.  Intelligence  of  the  pro- 
posals of  Mr.  Wilson  for  establishing  an  income  tax,  in  India,  of  2  per 
cent,  on  all  incomes  above  £20,  and  4  per  cent,  above  £50,  and  to  levy 
import  duties  of  10  per  cent,  on  cotton  twist  and  yarn.  24.  Unsuccess- 
ful meeting  at  the  stock  exchange,  to  consider  the  propriety  of  revising 
existing  scale  of  brokers'  commissions.  27.  Deputation  from  Manchester 
to  the  president  of  the  India  Council,  to  remonstrate  against  the  protec- 
tive duties  imposed  in  India.  29.  Bank  discount  advanced  from  4  per 
cent,  to  4^  per  cent.     Consols,  94|-. 

April  7.  Act  imposing  new  stamp  duties  came  into  operation. 
10.  Tenders  opened  for  £2,650,000  six  per  cent,  government  railway 
debentures  of  the  colony  of  Victoria.  Minimum  price  declared  to  be 
105;  only  £1,570,000  subscribed.  12.  Bank  rate  advanced  from  4^ 
per  cent,  to  5.  Consols,  94|^.  Intelligence  of  revolutionary  movements 
in  Sicily.  Proposition  from  government  of  the  Central  American  re- 
public of  San  Salvador,  to  compromise  the  foreign  debt  of  the  State 
(£79,000)  by  a  cash  payment  of  £16,000,  or  about  4s.  in  the  pound, 
unanimously  rejected.  Extraordinary  drain  of  notes  from  the  bank, 
the  amount  in  circulation  being  £23,467,255,  or  about  £3,000,000  be- 
yond the  average.  Much  alarm  among  a  portion  of  the  trading  classes 
at  sudden  refusal  of  discount  houses  to  continue  their  operations  on  the 
ordinary  scale.  Disquiet  allayed  by  the  discovery  that  Messrs.  Overend, 
GuRNEY  &  Co.  had  simply  withdrawn  a  total  of  about  £1,550,000  in 
notes  from  the  bank,  being  a  portion  of  the  amount  held  by  them  as  de- 
posits from  customers,  with  the  view  of  locking  these  notes  in  their  own 
safe.  Dissatisfaction  on  their  part  at  the  strict  operation  of  the  rule 
adopted  by  the  bank,  after  the  panic  of  1857,  to  withdraw  all  facilities 
for  the  practice  of  re-discounting,  alleged  to  be  the  cause  of  this  proceed- 
ing. The  experiment  terminated  in  the  notes  being  carried  back  to  the 
bank  by  Messrs.  Overend,  Gurney  &  Co.,  on  the  19th  of  April.  About 
this  time  Messrs.  Streatfeild,  Laurence  &  Co.  were  in  the  height  of 
their  business,  and  experiencing  some  inconvenience  from  what  was 
termed  the  "  conduct  of  the  bank  in  checking  the  commerce  of  the 
country."  News  of  the  indigo  riots  in  Lower  Bengal.  17.  Balance  of 
the  Victoria  Railway  loan  again  oflfered,  and  taken  at  the  minimum 
originally  named,  105.  20.  Frauds  detected  of  Pullinger  on  the 
Union  Bank  of  London,  of  which  he  was  principal  cashier.  The  amount 
subsequently  proved  to  be  £263,000,  and  on  the  15th  of  May  he  wa§ 
found  guilty,  and  sentenced  to  twenty  years'  penal  servitude.  The 
shares  of  the  bank  declined  from  30  to  23. 

May  1.  Tenders  invited  by  the  Grand  Trunk  Railway  of  Canada  for 


J 


Financial  Events  in  Europe,  1860.  455 

£1,111,500  second  six  per  cent,  preference  bonds  at  80.  On  the  Btli  of 
May  the  whole  were  stated  to  have  been  subscribed,  with  the  exception 
of  £225,000,  which  was  afterwards  placed.  Default  occurred  on  the  first 
dividend  becoming  due  at  the  end  of  September.  3.  Failure  of  Messrs. 
J.  &  A.  Blaikie,  solicitors,  at  Aberdeen,  with  liabilities  estimated  at 
£200,000.  The  senior  partner  absconded.  Protest  of  purchasers  of 
Indian  rupee  securities  against  a  determination  of  the  government  to 
render  them  liable  to  double  income  tax.  8.  News  of  native  outbreak 
in  New-Zealand.  Receipt  of  the  minute  issued  at  Madras  by  Sir  Charles 
Trevelyan,  on  the  financial  measures  of  Mr.  Wilson.  11.  Reduction 
of  the  bank  rate  of  discount  from  5  to  4-J-  per  cent.  Consols,  95|-. 
12.  Stocks  flat,  partly  in  consequence  of  the  expedition  of  Garibaldi  to 
Sicily.  News  of  failure  of  the  Red  Sea  telegraph  cable,  and  the  conse- 
quent loss  of  £800,000,  on  which  the  British  government  had  guaranteed 
4|-  per  cent,  for  fifty  years.  17.  Fall  of  nearly  1  per  cent,  on  the  Paris 
Bourse,  owing  to  the  landing  of  Garibaldi  at  Marsala.  Consols,  94|-. 
19.  London  bankers  adopt  an  arrangement  to  close  at  3  o'clock  on  Sat- 
urdays. 20.  News  of  the  Emperor  of  China  having  refused  the  ulti- 
matum of  the  Allies.  22.  Vote  of  the  House  of  Lords  for  maintaining 
the  paper  duties.  Consols  advanced  from  94f  to  95.  24.  Reduction  of 
the  bank  rate  of  discount  from  4^  to  4  per  cent.     Consols,  95^. 

June  18.  Meeting  of  the  Emperor  Napoleon  and  German  sovereigns 
at  Baden.  Consols,  93|-.  23.  News  of  the  stoppage  of  the  banking- 
house  of  Jecker,  Torre  &  Co.,  at  Mexico,  with  liabilities  for  £880,000. 
24.  New  Russian  4^  per  cent,  loan  of  £8,000,000  introduced  by  Messrs. 
Baring,  of  London,  and  Hope,  of  Amsterdam,  at  92.  The  amount  ulti- 
mately subscribed  was  £5,000,000.  25.  Public  subscription  opened  by 
Bank  of  France  for  £12,000,000  of  railway  obligations, 

July  3.  Failure  of  Streatfeild,  Laurence  &  Mortimore,  in  the  leather 
trade,  with  liabilities,  including  those  of  their  Liverpool  house,  amounting 
to  about  £1,200,000,  followed  by  the  stoppage  of  a  number  of  other  houses, 
with  aggregate  debts  (chiefly  represented  by  accommodation  bills)  of 
about  £1,000,000  or  £1,500,000.  4.  Consols  dull  on  announcement  of 
£3,800,000  being  required  for  China  war.  17.  Funds  firmer  on  an- 
nouncement that  the  deficit  of  £2,336,000  now  shown  in  the  revenue, 
notwithstanding  the  retention  of  the  paper  duties,  would  be  provided 
for  without  the  creation  of  new  securities,  partly  by  an  increase  of  the 
spirit  duties.  £1,500,000  East  Indian  5  per  cent,  railway  debentures 
for  five  years  offered  at  par.  Only  £1,200,000  were  taken  in  the  first 
instance,  but  the  balance  was  ultimately  placed.  23.  Consols  flat  on  the 
disturbances  in  Syria.  27.  Announcement  of  £9,000,000  being  required 
for  fortifications,  of  which  £2,000,000  would  be  raised  within  a  year. 

August  5.  New  5  per  cent.  Sardinian  loan  for  £6,000,000  opened  at 
Turin,  at  80^,  the  whole  of  which  was  speedily  subscribed,  the  applica- 
tions having  amounted  to  £22,000,000.  10.  Intimation  by  Lord  John 
Russell  that  Great  Britain  does  not  concur  in  the  attempt  to  gain  ad- 
mission for  Spain  to  the  rank  of  a  first-rate  power.  Satisfaction  expressed 
by  the  holders  of  her  securities,  who  are  suffering  from  the  confiscation 
she  still  practices.  14.  Vote  taken  for  an  Indian  loan  of  £3,000,000, 
as  matter  of  precaution  against  possible  contingencies  before  the  next 


456  History  of  the  Bank  of  England. 

meeting  of  Parliament,  the  estimate  published  in  the  spring  having 
proved  erroneous.  17.  Power  taken  by  the  chancellor  of  the  exchequer, 
as  a  precaution  against  the  contingency  of  a  bad  harvest  and  a  possible 
falling  off  in  the  revenue,  to  issue  an  extra  million  of  exchequer  bonds. 
23.  Reduction  in  the  Piedmontese  import  duties  on  yarn  tissues,  <fec.,  of 
cotton,  hemp  and  other  articles. 

September  1.  Transfer  and  dividend  business  of  the  Indian  debt  re- 
moved to  the  Bank  of  England.  11.  News  of  the  death  of  Mr.  Wilson, 
at  Calcutta.  13.  Half-yearly  court  at  Bank  of  England;  dividend  of  5 
per  cent,  declared,  leaving  the  rest  £3,008,489.  Heavy  failures  reported 
from  Rio  de  Janeiro.  Proposal  to  open  up  communication  between  Pegu 
and  Western  China  discountenanced  by  the  foreign  oflSce,  partly  on  the 
ground  that  it  might  inconvenience  that  department. 

October  10.  Decline  in  consols,  owing  to  purchase  of  gold  by  the 
Bank  of  France.  Public  meeting  on  the  determination  of  the  govern- 
ment to  extort  double  income-tax  on  Indian  native  securities  held  in 
England.  Committee  appointed  to  adopt  legal  measures  on  behalf  of 
the  holders.  Monthly  return  of  the  Bank  of  France,  showing  a  falling 
off  of  £2,840,000  in  the  stock  of  bullion.  21.  The  English  creditors  of 
the  republic  of  San  Salvador  agree  to  accept  £25,000  in  liquidation  of 
tlieir  claims  of  £79,000.  Intelligence  of  legal  proceedings  having  been 
taken  in  Canada  by  the  agents  of  judgment  creditors  in  England  to  pro- 
tect their  interests.  Rapid  fall  in  the  stock  and  debentures,  the  price  of 
the  stock,  which  a  year  previously  stood  at  40,  having  declined  to  26, 
and  of  the  ordinary  debentures,  which  were  at  74^,  to  52.  28.  News  of 
the  complete  overthrow  of  the  illegal  power  of  General  Franco,  in  the 
republic  of  Equador,  (the  debt  of  which,  chiefly  held  in  England  and 
Holland,  amounts  to  £1,824,000,)  by  the  constitutional  army  of  General 
Flore  s. 

November  8.  Bank  rate  of  discount  raised  from  4  to  4|-  per  cent. 
Consols,  9Z^.  Protest,  in  consequence  of  serious  disasters  in  the  Baltic, 
against  the  deck-loading  of  vessels.  9.  Bank  of  France  return  shows 
another  falling  off,  of  £1,000,000,  in  the  bullion.  Total  reduction  within 
the  past  year,  £8,600,000,  or  from  £26,000,000  to  £17,400,000.  12. 
Advance  in  rate  of  discount  of  Bank  of  France  from  3^  to  4^  per  cent. 
13.  Advance  in  the  Bank  of  England  rate  from  4^  to  5  per  cent.  Consols, 
93^.  15.  Advance  in  the  Bank  of  England  rate  from  5  to  6  per  cent., 
in  consequence  of  a  rapid  increase  in  the  drain  of  gold  to  Paris.  On 
this  occasion  the  joint-stock  banks,  instead  of  raising  their  allowances 
for  money  at  call  to  within  1  per  cent,  of  the  bank  rate  of  discount,  as 
usual,  fixed  it  at  4^  per  cent.  21.  Meeting  of  the  London  Discount 
Company.  Resolution  to  wind  up.  Arrangement  between  the  Bank  of 
France  and  the  Bank  of  England  for  the  latter  to  purchase  £2,000,000 
of  silver.  Immediate  improvement  in  the  money  markets  of  London 
and  Paris.  25.  News  of  heavy  fall  in  the  rate  of  exchange  at  New-York, 
owing  to  money  panic,  consequent  on  the  prospects  of  disunion.  29. 
Reduction  in  the  bank  rate  of  discount  from  6  to  5  per  cent.  Consols, 
93f.  30.  Further  unfavorable  accounts  from  New- York.  Average  fall 
of  20  or  30  per  cent,  in  the  principal  securities. 

December  1.  Commencement  of  gold  shipments  to  America.    £108,500 


Financial  Events  in  Europe,  1860.  467 

transmitted  by  the  Europa,  and  followed  by  other  amounts,  which,  before 
the  end  of  the  year,  raised  the  aggregate  to  nearly  £2,000,000.  5.  News 
of  the  suspension  of  most  of  the  banks  in  the  Southern  States  of  America. 
7.  News  of  combination  among  the  New-York  banks  for  mutual  support. 
9.  News  of  the  robbery  by  the  Mexican  government  of  £173,000  be- 
longing to  the  English  bondholders,  deposited  under  the  seal  of  the 
British  legation.  12.  A  further  sum  of  £1,500,000  East  Indian  5  per 
cent,  railway  debentures  for  five  years,  offered  at  par.  Prospectus  issued 
by  M.  Mires,  of  Paris,  of  new  Turkish  6  per  cent,  loan  of  £16,000,000, 
of  which  £5,000,000  is  offered  for  subscription  in  London,  at  a  price 
equal  to  59|.  List  to  be  closed  January  5,  1861.  15.  Intelligence  of 
the  crossing  of  the  Australian  continent,  from  south  to  north,  having 
been  completed  by  Mr.  Stuart,  of  Adelaide.  17.  News  of  the  treaty  of 
peace  with  China.  Indemnity,  £2,900,000.  21.  £50,000  4  per  cent. 
Jamaica  bonds,  guaranteed  by  the  home  government,  subscribed,  at  105. 
Abolition  of  the  passport  system  in  France  as  regards  English  subjects. 
31.  Bank  bullion,  £12,798,119,  being  the  lowest  point  of  the  year,  and 
showing  a  reduction  of  £3,662,705  from  the  total  held  at  the  commence- 
ment.    Consols,  92f. 

The  governors  of  the  bank  are  mostly  engaged  in  large  concerns 
of  their  own,  and  it  is*  hardly  possible  to  suppose  that  there  may  not 
arise  occasions,  on  which  their  attention  may  be  distracted  or  diverted 
from  the  affairs  of  the  bank  to  their  own.  At  all  events,  this  circumstance 
is  calculated  to  interfere  with  that  continuity  of  attention  to  the  concerns 
of  the  bank  and  to  the  interests  and  convenience  of  the  public,  which,  in 
the  opinion  of  Mr.  Norman,  with  whom  on  this  point  I  agree,  it  is  de- 
sirable that  the  person  intrusted  with  the  supervision  and  direction  of  every 
part  of  that  vast  establishment,  should  be  able  to  apply.  This  condition 
is  of  necessity  very  imperfectly  fulfilled  in  the  present  management.* 

I  consider  that  a  board,  consisting  of  twenty-four  directors  and  two 
governors,  is  too  numerous  for  deliberation  and  discussion  on  questions 
of  importance,  involving  points  of  difficult  solution,  and  affecting  the  in- 
terests and  convenience  of  the  public,  and  at  the  same  time  requirino* 
prompt  decision.  If  the  members  possess  and  profess  independent  opin- 
ions, each  of  them  might  descant,  for  half  an  hour  or  upwards,  upon  his 
peculiar  views,  and  the  most  fluent  and  determined  speaker  would  occupy 
most  time,  and  say,  perhaps,  what  was  least  to  the  purpose,  leaving  insuf- 
ficient opportunity  for  those  best  acquainted  with  the  subject  to  express 
their  opinions.  The  delivery  of  an  opinion  in  an  assemblage  so  numer- 
ous partakes  of  the  nature  of  a  set  speech  ;  and  a  decision  come  to  as  the 
result  of  such  speaking,  and  carried  by  a  simple  majority,  is  as  likely  to 
be  wrong  as  to  be  right,  and  in  some  points  of  view  more  likely  to  be 
wrong  than  to  be  right.  I  do  not  say,  because  I  have  no  means  of  know- 
ing the  fact,  that  this  would  be  a  correct  description  of  what  passes  in  the 
bank  court,  in  the  discussion  of  matters  of  financial  importance  brought 
before  it.  But  what  I  do  mean  to  say  is,  that  a  board  consisting  of 
twenty-six  members  is  totally  unfit  for  the  discussion  of  questions  such  as 
alterations  in  the  rate  of  interest,  which  are  brought  before  the  weekly 
courts.* 

*  Tooke's  History  of  Prices,  vol.  v. 


458  History  of  the  Bank  of  England. 


GENERAL     VIEWS 

As    TO    THE    Bank    Charter    of    1844. 

I  WILL  now  enumerate*  the  conclusions  which,  in  the  course  of  this 
inquiry,  I  have  sought  to  establish  ;  or,  in  other  words,  the  opinions 
which  it  has  been  my  purpose  to  set  forth. 

1.  That  the  obligation  to  satisfy  all  contracts  or  engagements,  ex- 
pressed in  terms  of  money  by  the  payment  of  specific  quantities  of  gold 
and  silver  coin  of  certain  fineness,  is  the  cardinal  principle  of  all  sound 
monetary  legislation. 

2.  That,  as  a  matter  of  feet,  the  maintenance  of  such  a  metallic  stand- 
ard, and  the  enforcement  by  law  of  strict  conformity  to  that  standard 
of  all  paper  and  other  forms  of  credit,  has,  for  a  long  period,  been  the 
law  and  practice  of  this  country ;  the  only  exception  being  the  period 
from  1797  to  1819,  when,  for  reasons  of  State  policy,  the  obligation  of 
cash  payments  was  suspended. 

3.  That  the  act  of  1819  fully  and  effectually  restored  the  payments  in 
cash  suspended  in  1797.  "Complement,"  or  additional  security  to  the 
maintenance  of  the  measure  of  1819,  is  a  source  of  danger  to  it. 

4.  That  there  is  great  unfairness  in  the  charge  brought  against  a  large 
majority  of  those  who,  with  myself,  are  opposed  to  the  act  of  1844,  to 
the  eftcct  that  we  seek  to  restore  a  paper  currency  not  limited  by  a  me- 
tallic standard ;  for  I  can  say  for  myself,  and  for  those  with  whose  opin- 
ions on  the  subject  I  am  best  acquainted,  that  we  do  not  yield  to  the 
upholders  of  the  act  of  1844  in  attachment  to  the  principle  consecrated 
and  effectually  maintained  in  operation  by  the  law  of  1819. 

5.  That  the  claim  set  up  in  behalf  of  the  act  of  1844,  to  the  effect  that 
the  amount  of  bullion  in  the  bank  has,  from  the  date  of  its  enactment  to 
the  present  time,  been  larger  than,  but  for  the  act  of  1844,  it  would  have 
been,  is  utterly  unfounded  and  inadmissible,  inasmuch,  as  there  is  the 
strongest  presumptive  proof  that  the  act  had  not  and  could  not  have  the 
effect  alleged  ;  the  new  source  of  supplies  of  gold  from  Russia  serving  to 
account  for  the  largeness  of  the  treasure  of  tlie  bank  from  1844  to  1847 ; 
and  the  still  larger  supplies  from  Australia  serving  to  account  for  the 
greater  amount  of  the  treasure  since  1847. 

6.  That  there  is  the  strongest  reason  to  believe,  that  had  it  not  been 
for  the  new  and  enlarged  supply  of  gold  from  Russia,  the  act  of  1844 
would  not  have  come  into  existence,  and  that,  had  it  not  been  for  the 
discoveries  of  gold  in  California  and  Australia,  the  act  could  not  have 
been  maintained  in  existence  to  the  present  time. 

7.  That  bank  notes  are  not  money  in  any  sense  which  does  not  also 
include  other  forms  of  paper  credit,  nor  (as  contended  by  Sir  Robert 


*Tooke'3  History  of  Prices,  vol.  v.  pp.  633-639. 


1 


Mr.  Tooke's  Views  as  to  the  Charter  of  184:4.  459 

Peel  and  his  party)  have  bank  notes  any  influence  on  the  foreign  ex- 
change, or  on  prices  greater  than,  or  different  from,  other  forms  of  credit. 

8.  That  the  assumption  also  by  Sir  Robert  Peel,  that  bank  notes,  strictly 
converted  into  coin  at  the  will  of  the  holder,  have  been  and  may  be  de- 
preciated ;  or,  in  other  words,  the  allegation  that  there  may  be,  as  it  is 
said  there  has  been,  a  disparity  between  gold  and  the  paper  which  circu- 
lates with  it  at  par,  is  a  fallacy  unsupported  by  experience  and  unintel- 
ligible in  reasoning ;  or  rather,  with  reference  to  the  definition,  is  a  con- 
tradiction in  terms. 

9.  That  there  is  no  foundation  in  argument,  or  authority  for  the  allega- 
tion, that  the  issue  or  creation  of  bank  notes  is  exclusively  and  solely  the 
peculiar  function  or  province,  or  prerogative  or  privilege,  of  the  sovereign 
or  state. 

10.  That  the  assumption  of  a  purely  metallic  currency  as  the  type  or 
model  of  a  perfect  circulation,  proceeds  wholly  upon  a  mere  fiction  of  the 
imagination,  inasmuch  as  we  can  neither  refer  to  the  authentic  records, 
nor  to  the  actual  existence,  in  this  or  other  countries,  of  any  such  me- 
tallic model. 

11.  That,  according  to  the  hypothesis  that  can  be  most  carefully 
framed,  of  what  would  be  the  action  of  a  metallic  currency,  we  have  the 
fullest  reason  to  conclude,  that  the  actual  variations  in  amount  of  our 
existing  mixed  circulation  of  coin  and  convertible  paper,  do  not  and  can- 
not differ  from  what  would  be  the  variations  in  amount  of  a  metallic  cur- 
rency. And  hence,  that  the  conditions  of  the  supposed  metallic  model, 
as  far  as  it  can  be  intelligibly  described,  were  fulfilled  by  the  currency  of 
this  country  previous  to  the  measure  of  1844,  and  have  not  been  fulfilled 
to  any  greater  extent,  nor  in  any  better  mode,  by  the  aid  of  that  measure, 
since  1844. 

12.  That,  consequently,  the  leading  tenet  of  the  doctrine  of  the  new 
school,  which  assumes  and  asserts,  that  the  circulation,  as  it  existed  prior 
to  1844,  did  not  conform  in  its  variations  to  what  would  have  been  the 
variations  of  a  metallic  currency,  and  was,  therefore,  vicious  in  principle 
and  pernicious  in  practice,  is  not  maintainable  as  a  ground  for  the  sup- 
port of  the  principle  of  the  act  of  1844. 

13.  That  equally  unfounded  is  the  proposition,  which  maintains  that 
the  union  of  the  functions  of  issue  and  banking  in  the  Bank  of  England 
is  incompatible  with  a  due  regulation  of  the  amount  of  the  issues.  On 
the  contrary,  the  blending  and  combination  of  the  two  functions  is  not 
only  compatible  and  congruous,  but  highly  expedient,  as  a  means  of  pro- 
moting the  interests  and  convenience  of  the  public  ;  and  is,  moreover, 
better  calculated  to  secure  the  maintenance  of  specie  payments  than  the 
present  system  of  separation. 

14.  That  a  great  mistake  was  committed  by  the  framers  of  the  act  of 
1844,  in  the  assumption  that  the  banking  department  of  the  Bank  of 
England  admits  of  being  conducted  in  the  same  way,  and  with  only  the 
same  effects  on  the  interests  and  convenience  of  the  public,  as  any  other 
non-issuing  joint-stock  bank. 

15.  That,  by  the  plan  of  separation,  a  distinct  reserve  of  gold  is  pro- 
vided, for  the  security  of  the  circulation,  which  is  the  part  of  the  liabili- 
ties least  exposed  to  fluctuation  ;    while  the  other  class  of  liabilities, 


460  History  of  the  Bank  of  England. 

whicli  are  subject  to  a  wider  range  of  fluctuation,  are  left  unprovided 
with  any  similar  security. 

16.  That  this  separation  of  the  functions  of  the  two  departments, 
which  were  erroneously  held  to  be  incompatible,  has  caused  them  to  be- 
come actually  antagonistic,  inasmuch  that,  in  a  time  of  pressure  such  as 
1847,  an  increased  demand  for  bank  notes  acts  directly  in  diminution  of 
the  banking  reserve,  instead  of  acting,  as  such  an  increased  demand  for 
bank  notes  would  do  under  a  state  of  union  of  the  two  departments,  in 
positive  relief  of  the  pressure  on  the  bank. 

17.  That  the  opinion  which  I  expressed  when  writing  on  the  subject 
in  March,  1844 — "that  the  total  separation  of  the  business  of  issue 
from  that  of  banking  is  calculated  to  produce  greater  and  more  abrupt 
transitions  in  the  rate  of  interest  and  in  the  state  of  credit  than  a  sys- 
tem of  union  of  departments" — has  been  amply  borne  out  by  experi- 
ence. 

18.  That  the  eventful  and  varied  experience  of  the  last  eleven  years 
has  proved  that,  under  the  plan  of  a  separation  of  the  departments,  the 
changes  in  the  rate  of  interest  and  in  the  state  of  credit  have  been  far 
more  abrupt,  frequent  and  violent,  than  under  the  previous  system. 

19.  That  these  frequent  and  abrupt  changes  have  been  aggravated  by 
the  erroneous  and  exaggerated  view  taken  by  the  directors  of  the  Bank 
of  England  of  a  duty  which  they  appear  to  have  supposed  to  fall  upon 
them,  of  conducting  the  business  of  the  banking  department  in  a  rigid 
obedience  to  what  is  called  the  principle  and  spirit  of  the  act  of  1844. 

20.  That  the  errors  of  management  chargeable  against  the  bank  di- 
rectors, as  well  before  as  since  the  measure  of  1844,  seem  to  be  referable 
in  no  small  degree  to  faults  in  the  constitution  and  composition  of  the 
governing  body  of  the  bank. 

21.  That  the  practice  of  deciding  on  so  important  a  measure  as  altera- 
tions of  the  rate  of  discount  by  a  mere  majority  of  a  numerous  board  of 
directors,  after  a  brief,  and,  perhaps,  hurried  discussion  taking  place  at  a 
weekly  meeting  of  the  court,  is  a  practice  highly  objectionable;  and  that, 
in  truth,  it  is  not  easy  to  suppose  a  machinery  worse  calculated  to  ac- 
complish the  end  in  view. 

22.  That  it  is  to  be  regretted  that,  in  1844,  Sir  Robert  Peel  did  not 
apply  his  eminent  administrative  talents  to  improve  the  constitution  of 
the  governing  body  of  the  bank,  instead  of  committing  himself  to  dog- 
matic legislation  on  the  general  subject  of  the  currency — a  subject,  the 
knowledge  of  which  he  clearly  had  not  mastered. 

23.  That  next,  therefore,  to  the  abrogation  of  the  act  of  1844,  as  it 
relates  to  the  division  of  the  departments  of  the  Bank  of  England,  and  to 
restrictions  on  the  circulation  of  bank  notes,  the  most  important  question 
relating  to  the  currency  which  can  occupy  the  attention  of  Parliament, 
will  be  the  application  of  a  remedy  to  the  obvious  faults  in  the  constitu- 
tion and  rules  of  management  of  the  governing  body  of  the  Bank  of 
England. 


Alterations  of  the  Rate  of  Discount.  461 


THE   FREQUENT   ALTERATIONS    OF    THE    MINIMUM    RATE   OF   DIS- 
COUNT   OF    THE    BANK    OF    ENGLAND    DURING    EIGHT    YEARS, 

1847-1855. 

Comments  thereon  of  the  Lords'  Report. 

The  variations  in  the  bank  rate  of  discount*  since  the  crisis  of  1847 
have  been  nearly  as  frequent  as  they  were  in  the  period  noticed  in  the 
Lords'  report,  (section  6.) 

From  8  per  cent.,  at  the  close  of  October,  1847,  it  was  reduced  to  6 
per  cent,  on  the  2d,  and  to  5  per  cent,  on  the  23d  December  of  that  year. 

It  was  thenceforward  reduced  by  successive  steps  until  the  22d  April, 
1852,  when  it  reached  the  lowest  rate,  or  2  per  cent.  It  continued  at  2 
per  cent,  till  the  6th  January,  1853.  It  was  then  raised  to  2^  per  cent., 
and  further  advanced  thenceforward  by  steps  or  stages  of  ^  per  cent, 
each  till  the  11th  May,  1854,  when  it  reached  5^  per  cent.  That  rate 
was  continued  for  a  short  time  only,  and  was  progressively  reduced  to  3|- 
per  cent,  on  the  14th  June  of  the  present  year  (1855.) 

The  number  of  variations  during  the  fall  from  8  per  cent,  to  2  per 
cent,  was  ten ;  and  during  the  subsequent  fluctuations,  to  the  present 
rates  of  6  and  7  per  cent.,  the  number  has  been  sixteen ;  making  the 
total  of  the  variations  in  the  rate  during  the  entire  period  from  25th  Oc- 
tober, 1847,  to  December,  1855,  twenty-six,  and  the  total  number  from 
the  passing  of  the  act  of  1844  to  this  time  no  less  than  forty. 

In  these  frequent  alterations  the  directors  have  been  acting,  no  doubt, 
in  conformity  with  what  they  have  considered  to  be  the  spirit  of  the  act 
of  1844,  and  in  obedience  to  the  exhortations  of  the  author  of  that 
measure.  Whether  this  system  of  a  wide  range  of  fluctuation,  and  of 
frequent  changes  between  the  extremes,  be  more  profitable  to  the  bank 
than  a  more  uniform  rate,  is  a  question  upon  which  it  would  be  pre- 
sumptuous in  any  one  not  being  a  director  to  offer  an  opinion.  But, 
that  it  is  inconvenient  and  injurious,  in  a  public  point  of  view,  on  the 
grounds  stated  in  the  extract  already  given  (page  83,  seq.)  from  the 
Lords'  report,  I  think  there  can  be  no  reasonable  doubt. 

The  transition  from  a  high  to  a  low,  and  especially  from  a  low  to  a 
high  rate  of  discount,  is  always  attended  with  some  degree  of  inconven- 
ience, and  with  a  disturbance,  more  or  less,  of  existing  arrangements. 
Such  transitions  are  inevitable,  as  a  consequence  of  the  infinite  variety  of 
circumstances,  commercial  and  political,  (including  under  the  former  the 
eflfects  of  vicissitudes  of  the  seasons,)  which  are  calculated  to  influence 
the  demand  for  the  use  of  capital ;  and  ti  is  quite  impossible  for  the 
bank,  or  any  other  institution,  to  exercise  any  permanent  control  over 
the  rate  paid  for  the  use  of  it — a  rate,  of  course,  determined  by  the  law 
of  supply  and  demand.  This  is  true ;  but  it  is  nevertheless  the  precise 
fallacy  of  the  plea  usually  adduced  in  justification  of  the  conduct  of  the 
bank  on  every  occasion  on  which  the  propriety  of  its  announced  altera- 

*  Tooke's  History  of  Prices,  vol.  v.  pp.  555-558. 
30 


462  History  of  the  Bank  of  England. 

tions  is  canvassed  and  questioned  ;  for  it  is  beyond  question,  that  in  the 
large  majority  of  instances  the  movements  of  the  bank  in  respect  of  its 
rate  of  interest  arc  attended  with  very  perceptible,  although  they  can  be 
only  temporary,  effects.  Of  this  there  can  be  no  better  proof  than  the 
anxiety  manifested  on  the  stock  exchange  and  by  the  money  dealers,  on 
every  occasion  when  a  change  is  expected,  to  learn  the  determination 
come  to  at  the  breaking  up  of  the  weekly  meeting  of  the  court  of  direct- 
ors on  the  Thursday.  And  the  moral  eftect  of  the  course  adopted  by 
the  bank  on  such  occasions  is  frequently  much  greater  than  might  be  ex- 
pected from  a  consideration  of  the  mere  difference  in  the  rate.  But  it  is 
chiefly  when  the  reduction,  on  the  one  hand,  is  much  below,  or  the  ad- 
vance, on  the  other,  much  above  their  usual  rate,  that,  in  the  one  case,  it 
inspires  undue  confidence,  leading  to  overtrading  and  speculation,  and  to 
an  unsound  state  of  credit ;  and,  in  the  other,  that  it  gives  rise  to  excess- 
ive alarm,  tending  to  terminate  in  panic.  For  example,  it  has  been 
abundantly  shown,  in  a  multitude  of  forms,  that  the  act  of  1844  was  in- 
strumental in  aggravating  or  intensifying  the  tendency  which  from  other 
causes  existed  to  each  of  these  extremes,  in  the  interval  between  the  date 
of  its  enactment  and  the  latter  months  of  1847. 

There  cannot,  I  think,  be  a  reasonable  doubt  but  that  the  reduction  of 
the  bank  rate  of  discount,  on  the  passing  of  the  act,  from  4  per  cent., 
which  had  been  its  previous  minimum,  to  2|-,  and  the  continuance  of  a 
rate  so  low  as  3  per  cent,  during  a  great  part  of  1845  and  1846,  contrib- 
uted to  increase  and  extend  the  spirit  of  enterprise,  and  the  railway  ma- 
nia and  the  overtrading,  especially  in  the  East  India  trade,  which  marked 
that  period. 

This  view  of  the  effects  of  the  reduction  of  the  bank  rate  is  thus  lio- 
ticed  by  the  Lords'  committee : 

"  The  effect  of  a  low  rate  of  interest  could  not  fail  to  give  a  great  ad- 
ditional stimulus  to  speculation  of  all  kinds.  It  could  not  but  have  aug- 
mented the  facility  of  forming  joint-stock  companies  for  rail-roads  and 
other  purposes.  In  the  former  case  it  has  acted  the  more  effectually,  as 
the  bank  of  late  adopted  a  practice  of  investing  its  capital  in  railway  se- 
curities. The  sum  of  £2,481,000  was  so  invested;  and  these  securities 
seem,  by  the  bank,  to  have  been  substituted  for  the  floating  debt  of  the 
country.     In  1844  the  greatest  investments  of  this  kind  took  place. 

"  The  proceeding  is  the  more  questionable  when  it  is  considered  that 
the  governors,  in  describing  the  causes  of  the  commercial  distress,  have 
informed  the  committee  that  '  one  cause  of  the  distress  is,  that  many  of 
those  parties  have  been  dealing  m  railway  shares ;  the  capital  which  they 
ought  to  have  kept  in  their  business  they  have  put  out,  in  expectation  of 
realizing  at  a  profit ;  but  railway  shares  have  become  nearly  unsalable,  and 
their  capital  has  been  locked  up.'  Although  a  distinction  undoubtedly 
exists  between  the  rail- road  debentures  purchased  by  the  bank  and  the 
shares  of  railway  companies,  yet  it  is  evident  that  the  purchase  of  these 
securities  by  the  Bank  of  England  must  have  given  a  high  sanction  and 
an  effective  stimulus  to  those  very  undertakings  which  the  committee 
find  are  afterwards  referred  to  among  the  causes  of  the  commercial  dis- 
tress."— Lords'  Rejiort,  1848,  p.  36. 


ALPHABETICAL    INDEX 


TO   SUBJECTS   CONTAINED    IX 


THE    HISTORY    OF    THE   BANK    OF   ENGLAND. 


Published  at  the  office  of  the  "  Bankers'  Magazine  and  Statistical  Eegistek,  New-York." 
One  volume,  octavo,  pp.  462.    Price,  Three  Dollars. 


Aberdeen,  exchange  banks,  1845,  399. 

Abingdon  old  bank,  failed,  S80. 

Addington,  Mr.,  extract  from,  134,  135. 

Agricultural  societj',  first  in  Scotland,  80. 

Aislabie,  chancellor  of  the  exchequer,  68. 

infamous  conduct  of,  76. 

AleSsi,  Vincent,  143. 

Alison's  "History  of  Europe,"  extracts 
from,  112,  119,  136,  138,  141, 170,  171, 
173,  176,  179,  183,  185,  186,  188,  197, 
199,  202,  207,  210,  213,  215,  226,  242, 
243,  251,  253,  273,  299,  370,  376. 

Althorpe,  Lord,  extracts  from,  235,  236. 

presented  the  plan  of  government 

for  renewing  the  charter  of  the  bank  in 
1832,  233. 

America,  management  of  public  debt  in, 

139. 

American  firms,  failures  of,  256. 

South,  speculations,  160. 

stamjJ  act  repealed,  130. 

war,  110. 

Amsterdam,  rate  of  discount,  413. 

Amiens,  peace  of,  133. 

Anderson,  the  historian  of  English  com- 
merce, extracts  from,  32,  55,  65,  67. 

Appendix,  311. 

Arkwright's  second  patent  for  spinning 
frame,  131. 

spinning  fi'ame,  130. 

Art  of  bleaching  introduced,  130. 

Ashburton,  Lord,  196,  288. 

——  commissioner  to  the  United  States, 

294. 

treaty,  193. 

ratified,  294. 

Aasignats,  French,  118,  138. 


Assignats  given  as  security  for  a  forced 
loan,  136. 

issue  of,  in  France,  131. 

Assurance  companies  chartered,  73. 

Astlett,  Kobert,  134. 

Atterbury,  Bishop  of,  seized,  82. 

Attwood,  Mr.,  204,  217,  288. 

Australia,  effects  of  the  discoveries  in, 

407,  420. 

emigration  to,  403. 

influx  of  gold  from,  412. 

Australian  agricultural  company,  403. 

Austria,  Bank  of,  105. 

government  situation,  176. 

loan  contracted  for,  in  1824,  206. 

of  £7,000,000  for,  1851,  400. 

Bank  of  Asnsterdasn,  322. 
Bank  of  England,  33. 

accusations  against  the  directors,  49. 

artifice  of  the,  87. 

founder  of  the,  36. 

five  pound  notes  issued,  131. 

five    pound    notes    in    circulation, 

amount  of,  1792  to  1816,  169. 

establishment  of  the,  41. 

extension  of  the  charter,  57. 

increase  of  dividend,  105. 

in  Grocer's  Ilall,  4^. 

opposition  to  the,  39. 

one  and  two  pound  notes,  132. 

withdrawal  of,  176,  223. 

trial  of  the,  43. 

origin  of  the,  36,  319. 

will  of  the,  44. 

epitaph  of  the,  45. 

decrease  of  discounts,  123. 


464 


Alphabetical  Index. 


Bank  of  England,  difficulties  of  the,  45. 

suspension  of  the,  121,  47. 

pamphlets  on  the,  39, 

preserve  their  credit,  52. 

jDreservation  of  credit,  95. 

price  of  stock  of  the,  164. 

services  of  the,  54. 

advance  to  government,  55,  11*7. 

amount  of  notes  in  circulation  under 

five  pounds,  1797  to  1816,  169. 
-  saved  from  pillage,  56. 

silver  tokens  issued  by,  131. 

investing  on  mortgages,  188. 

— -  its  importance,  57. 

remarks  upon  the,  53. 

review  of  the,  53. 

run  on  the,  57,  81,  200,  226,  801. 

stock,  fall  of,  58. 

unclaimed  dividends,  109,  141. 

rivalry  with  the,  68. 

rest  of  the,  80. 

disputed,  253. 

error  of  the,  408. 

extension  of  discounts,  125. 

amount  of  commercial   paper   dis- 
counted, 1818-1832,  214. 

assistance  to  government  from  the, 

82. 

analysis  of  the  act,  41. 

circulation  of  one  pound  notes,  183. 

new  building  of  the,  83. 

■  new  subscription,  55. 

stratagem  of  the,  87. 

ten  and  fifteen  pound  notes  issued, 

130. 

reduction  of  interest,  89. 

danger  to  the,  221. 

discontinuance  of  notes  under  five 

pounds,  176. 

dividends  of  the,  89,  312,  314. 

1821-1827,  198. 

description  of  the  bank,  90. 

lend  money  on  plate,  47. 

loan  to  government,  93. 

loss  on  sixpenny  pieces,  224. 

alarm  of  the  directors  of  the,  96. 

attacked,  97. 

• military  force  in  the,  98. 

partial  resumption  by  the,  172. 

purchase  of  the  dead  weight,  175. 

fosses  of  the,  98. 

resumption  of  cash  payments  by  the, 

173. 

gain  from  paper  circulatit)n,  141. 

interest  fixed  at  four  per  cent,  in 

the,  175. 

shares  of  the,  lowest  and  highest, 

1821-1827,198. 

stock,  fall  in,  178. 

branch  banks  suggested,  211. 

branches  of  the,  218. 


Bank  of  England,  cash  and  bullion  in  the, 

106. 

court  of  directors  of  the,  114. 

petition  of  the,  173. 

protest  of  the,  237,  116. 

memorial  of  the,  116. 

notes,  amount  in  circulation,  1818 

to  1832,214. 
notes,   yearly    average    of,    1844- 

1857,  435. 
crisis  in  the  history  of  the  corpora- 
tion of  the,  117. 

dismay  of  the  directors  of  the,  121, 

paper  of  the,  125. 

improved,  133. 

internal  alterations,  261. 

charter,  committee  on  the,  432. 

restriction  act,  126. 

charter  suspended,  429. 

charter,  1832,  233. 

circulation  department,  261. 

court  of  proprietors  of  the,  126. 

balance  in  favor  of  the,  126. 

bonus  to  the  proprietary',  133,  161. 

claims  upon  the  State  by  the,  131. 

■  profits  of  the  proprietors,  137. 

accounts  of  the,  139. 

increase  of  the,  139. 

receive  from  the  public,  140. 

enlarge  their  dividend,  140. 

failure  of  the  governor  of  the,  239, 

reduction  in  the  rates  of  manage- 
ment, 141. 

paper  depreciated,  145. 

notes  at  a  discount,  153. 

restriction  act  of  the,  152. 

large  advances  to  the  State,  159. 

lowest  coin  and  bullion  held  by  the, 

444. 

note,  new,  description  of,  441. 

pay  gold,  163. 

paper,  value  of,  167. 

tokens,  154. 

tokens  issued  by  the,  137. 

resumption  of  cash  payments,  167. 

dividends  raised  from  seven  to  ten 

per  cent.,  161. 
governor  and  directors  elected  April, 

1861,  343. 

niview  of,  by  Richard  Valpy,  436. 

stock,  bonus  of  twenty-five  per  cent., 

162. 
to  pay  specie  for  its  notes  on  de- 
mand, 170. 

suspension  of  the  charter  of  the,  381. 

and  the  chancellor,  192. 

bullion  and  coin,  1844  to  1862,  336. 

branches  in  1856,  418. 

supply  gold,  196. 

bullion  in  the,  1857,  429.    . 

pay  in  half  sovereigns,  200, 


Alphabetical  Index. 


465 


Bank  of  England,  duties,  qualifications, 
<fec.,  of  the  governors  of  the,  344. 

conduct  of  the,  203. 

•  and  the  discount  houses,  443. 

assistance  of  the,  210. 

bullion  reserve,  1778  to  1844,  317. 

bullion  in,  1855,  417. 

.  directors  of  the,  212. 

surplus  profits,  1778  to  1844,  317. 

tribute  to,  during  the  panic,  212. 

■  reserve  of  notes,  1844  to  1862,  336. 

make  advances  on  goods,  216. 

directors  of  the,  1694  to  1861,  340. 

protest  of  the,  236. 

over-issue  of,  in  1857,  435. 

bills  of  the,  256. 

bonuses  on  stock  of  the,  313. 

alterations  in  the,  261. 

dividends,  from  1731  to  1861,  311. 

from  1694  to  1729,  314. 

light  sovereigns  called  in  by  the,  265. 

loans,  1778  to  1844,  317. 

returns  of  the,  297. 

shares,  lowest  and  highest,  1731  to 

1861,  311. 

shuttings  of  the,  299. 

a  visit  to  the,  329. 

traditions  of  the,  300. 

private  deposits,  1844  to  1862,  336. 

deposits,  1778  to  1844,  317. 

public  deposits,  1844  to  1862,  336. 

interior  arrangements  of  the,  302. 

the  court  room  of  the,  305. 

management  of  the,  306. 

chief  cashier's  office,  305. 

deposits  in  the,  308. 

circulation,  1778  to  1844,  317. 

1855,  417. 

enlargement  of  the,  303. 

first  savings  bank,  172. 

Bank  of  France,  a  demand  on  them  for 
bullion,  127. 

transactions  with  the,  253. 

application  to  the,  254. 

suspension  of  payment,  391. 

Bank  of  Genoa,  failure  of  the,  89. 

of  Lisbon,  220. 

^-^  of  London,  increase  in  deposits  in 
1861,  316. 

deposits  each  year,  1857  to  1861,  315. 

of  Scotland,  the  projector  of,  33. 

of  St.  George,  322. 

of  St.  Petersburg,  131. 

of  the  United  States,  131. 

.  charter  expired,  172. 

'  of  Venice,  established,  17. 

establishment  of  a  national,  30. 

of  credit,  pamphlet  on,  31. 

of  credit,  32. 

land,  32. 

national,  39,  131. 


Bank  of  Venice,  joint-stock,  236. 

royal,  60. 

branch,  219. 

of  Vienna  established,  66. 

notes,  iise  of,  256. 

— —  note  paper,  95. 

—^  paper,  reduction  of,  153. 

profuse  issue  of,  146. 

value  of,  1315  and  1816,  167. 

■  restriction  act,  126. 
— —  restriction  bill  proposed,  135. 

fraud,  279. 

of  credit  established,  31. 

does  not  flourish,  31. 

shares,  price  of,  1835-1840,  255. 

stock,  fall  in,  178. 

prices  of,  1830-1836,  241. 

1841-1846,  293. 

Bankers,  Lombards  dealt  as,  18. 
— —  failure  of  country,  193. 

failure  of,  in  London,  94. 

private,  209. 

first  run  upon  the,  27. 

private,  52. 

in  London,  178,  309, 

■ increase  of,  108. 

on  first  failures  of,  94,  279. 

— —  circular,  London,  444. 

country,  failures  of,  110. 

check  on,  216. 

— ^  circulate  notes  under  £5,  124. 

unable   to   meet  their  liabili- 
ties, 195. 

bills  of,  195. 

issue   notes  for  five   and   ten 

shillings,  216. 

• dislike  branch  banks,  218. 

■ distrust  of  American,  242. 

of  Birmingham,  219. 

petition  of,  280. 

Banking,  continental,  438. 

house,  not  a  single  one  in  London 

in  1694,  320. 

progress  of,  in  Great  Britain,  437. 

— —  under  the  Stuarts,  22. 

houses,  balances  of,  205. 

-^—  country,  193, 
Bankruptcies  in  1815, 161. 
Barber  and  Burchman,  284. 
Beckmann's  history  of  inventions,  extracts 

from,  14. 
Berlin  decrees,  138. 

Bentinck's,  Lord  George,  project  for  rail- 
ways in  Ireland,  372. 

remarks  on  the  bank  charter 

Baring,  173,  213.  [act,  386. 

Brothers  &  Co.,  loan  by,  254. 

Messrs.,  contract  a  loan  for  Russia, 

397. 


466 


Alphabetical  Index. 


Banks,  circulation  of  country,  1813-1832, 

214. 

1849,  396. 

Glasgow,  suspension  of,  429. 

joint-stock,  in  London,  236. 

Liverpool,  suspension  of,  429. 

number  of  country,  163. 

origin  of  country,  107. 

over-issue  of  the  joint-stock,  224. 

Scotch  excliange,  1845,  399. 

suspension  of,  in  United  States,  429. 

Baring,  Mr.,  extract  from,  174,  179,  213, 
217,  235,  374. 

Mr.,  answer  of,  to  Peel's  statement 

of  the  bank  charter  act,  386. 

Mr.,  objection  to  the  income  tax,  368. 

Alexander,  extract  from,  197. 

Barber,  trial  of,  285. 
Bayonets  invented  at  Bayonne,  46. 
Birmingham,  advance  to,  217. 
Blunt,  Sir  John,  projector  of  the  South 
Sea  scheme,  68. 
Board  of  Trade,  298. 
Bodleian  library,  24. 
Bogle,  Allan  George,  267. 

Kerrich  &  Co.,  267. 

Boling'broke,  genius  of,  57. 
Bombay  and  Tangier  ceded,  46. 

rates  of  freight  to,  416. 

Bonus,  87. 
Bord,  Mr.,  288. 
Botany  Bay  discovered,  131. 
Bourbel,  Marquis  de,  266,  270. 
Boyd,  Walter,  remarks  on  the  drain  of 
specie,  123. 
Bramah  it  Co.,  inventors  of  the  machine 
for  numbering  notes,  306. 
Brazils,  147. 
Brazil,  loan  contracted  for  in  1824,  206. 

loan  contracted  for  in  1825,  207. 

Bremen  sold  to  George  L,  67. 
Bridgewater  canal,  94. 
Briscoe,  John,  proposes  a  Land  Bank,  323. 
Britain,  position  of,  103. 
Bi'itish  Association  for  the  advancement 
of  science,  436. 
British  cast  plate  glass  company,  131. 
British   Linen   Companj*,   fluctuation  of 
notes  in  circulation,  147. 
Brougham,  Lord,  extract  from,  153,  353. 

speech  of,  225. 

resolutions  of,  on  the  state  of  trade 

and  manufactures,  183. 

Brown,  one  of  the  directors  of  the  Royal 

British  Bank,  430. 

Brunswick,  House  of,  the  head  of  the, 

ascended  the  English  throne,  58. 

Bubble  companies  of  1824,  189. 

Buckle-makers  against  shoe-strings,  131. 

Buckle,  Mr.,  extracts  from  his  History  of 

Civilization,  286. 


Buenos  Ayres,  loan  contracted  for,  in 
1824,  206. 

trade  with,  147,  161. 

Building  companies,  number  projected, 
amount  of  capital,  <fec.,  in  1827,  206. 

Bullion,  drain  of,  14,  26,  117,  252. 

export  of,  135,  405. 

import  of,  405. 

in  the  bank,  184,  429. 

and  coin,   lowest  amount  held   by 

the  bank,  444. 

high  price  of,  145. 

committee,  148. 

committee,  report  of,  145. 

re[)ort,  148. 

standard  price  of  gold,  169. 

speculators,  163. 

traffic  in,  153. 

office,  304. 

•  purchased  by  the  Governor,  307. 

Burgess,  forgery  of,  287. 

Burke,  Mr.,  296. 

speech  on  the  tea  tax,  131. 

Burnet's  "  History  of  his  own  times,"  ex- 
tract from,  40. 

Burnet,  Bishop,  56. 

Cabal  ITIiiiislry  in  office,  27. 
Calcutta,  rates  of  freight  to,  414. 

rates  of  freight  to,  185.3-54,  416. 

Calico  printing  introduced  into  England, 

46. 
California,  discoveries  of,  in  1848,  419. 

effects  of  the  discoveries,  407. 

influx  of  gold  from,  398. 

over-trading  to,  412. 

Cameron,  a  director  of  the  Royal  Britisli 
i3ank,  430. 
Campbell,  Lord,  extract  from,  430. 
Canal  from  Stockholm  to  Gottenburg,  130. 
Canal,  rail-road,  <tc.,  companies,  capital, 
number  of  shares,  <tc.,  in  1827,  206. 
Canning,  Mr.,   170,   183,   198,  202,  205, 

215,  232. 
Carlisle  capitulated,  85. 
Cash  payments,  historical  sketch  of  the 
cessation  of,  113. 

suspension  of,  122. 

restricted,  126,  1.34. 

impracticable,  136. 

suspension  act,  152. 

cessation  of,  113. 

drain  of,  119. 

for  notes,  163. 

Cashier's  office,  chief,  305. 
Cathcart,  Lord,  157. 
Catholic  emancipation,  1827,  214. 
Chamberlain,  Hugh,  a  new  bank  proposed 
by,  43,  323. 

speculations  of,  324. 

Chamber  of  Commerce  at  Manchester,  241. 


Alphabetical  Index. 


467 


Chambers,  extract  from,  62. 

Chancellor  of  the  Exchequer,  1 1 Y. 

Change  Alley,  credit  of  the  government 

in,  39. 

Change  Alley,  09,  '74. 

Charles  First,  22. 

Second,  26,  21,  320. 

Charles  Edward,  landed  in  England,  85. 

Charter  act,  bank,  274. 

of  1844,  suspension  of,  426. 

clauses  of  the  new,  27Y. 

banks  of  Scotland  during  the  panic 

of  1793,  111. 

Charters,  bank,  41,  48,  53,  54,  57,  84,  92, 

alterations  in  the,  211.      [103,  128. 

new,  233. 

date  of,  41. 

importance  of  the,  237. 

of  the  bank  suspended,  429. 

Chaumette,  M.  de  la,  218. 

Child,  Mr.  Francis,  26,  79. 

Messrs.,  attempt  to  injure,  88. 

Choiseul,  Due  de,  stratagem  of,  301. 

Christmas,  William,  282. 

Chronicle,  Morning,  opinion  of  the,  107, 

205. 

Circulation  estimated,  119. 

debased,  23. 

the  whole  banks  and  bankers',  1844 

to  1851,  383. 

paper,  145. 

of  small  notes  extended,  184. 

country,  120. 

City  Bank  of  London,  deposits  each  year, 
1856  to  1861,  315. 

City  of  Glasgow  Bank,  suspended  pay- 
ment, 431. 

Clauses  of  the  new  bill,  277. 

Clerks  in  banking  establishments,  a  re- 
laxation wanted  in  the  labors  of,  265. 

Clipped  money  received  by  banks  at  its 
full  value,  47. 

Clipping  and  filing,  by,  the  value  of  coins 
had  been  diminished,  47. 

Cobden,  Mr.,  testimony  of,  83. 

Cobden,  Kichard,  370. 

extract  from,  83. 

Cochrane,  Lord,  sentenced  to  imprison- 
ment, 157. 

Cockerell,  Mr.,  306. 

Cceur  de  Lion,  Richard,  reign  of,  17. 

Coin  and  bullion,  lowest  amount  held  by 
the  bank,  444. 

Coinage-re,  of  the  silver,  47. 

Coins  of  doubtful  weight,  323. 

Columbia,  loan  contracted  for  in  1824,  206. 

Commerce  in  Great  Britain,  146. 

Anderson  on,  32. 

state  of,  25. 

Commercial  Bank  of  London,  amount  of 
deposits  each  year,  1841  to  1861,  315. 


Commercial  Bank  of  Ireland,  242. 

bankruptcies  in  1847,  380. 

crisis  in  Amsterdam,  1 30. 

credit  almost  suspended  in  England, 

429. 

embarrassment  in  England,  172,  379. 

panic  in  London,  131. 

Ireland,  172. 

jealousy  of  the  Dutch,  68. 

Commons  raised  to  power,  19. 

house  of,  76,  123. 

committee  of  the,  report  of,  433. 

Committee  of  inquiry  on  forgery  of  bank 
notes,  report,  227. 

appointed  to  jjrevent  forged  notes, 

171. 
Company,  East  India,  19,  34,  56. 

of  mine  adventurers,  54. 

Mississippi,  59. 

London  assurance,  73. 

joint-stock,  185. 

of  the  west,  letters  patent  granted 

to  the,  60. 
Companies,  list  of,  205. 

price  of  shares  in,  191. 

Comptroller  general  of  finance,  France, 

Law  resigned  the  office  of,  64. 

Consols,  lowest  and  highest  price,  1732- 

1755,  256. 

1821-1827,  198. 

1831-1861,  311. 

1835-1840,  255. 

■ 1841-1846,  293. 

fell  to  85,  373. 

Conspiracy  against  the  government,  81. 
Conti,  Prince  de,  63. 
Continental  conspiracy,  266. 

its  discovery,  270. 

■  fate  of  the  conspirators,  270. 

Contraband  trade  at  a  premium,  138. 
Copyright  act  in  England,  52. 
Corporation,  importance  of  the,  303. 
Cotton  exported  by  Jamaica,  130. 

Mr.,  304. 

price  of,  1848-1850,  398. 

Council  of  trade,  52. 

Country,  disaffection  of  the,  120. 

traders,  108. 

Court  room,  304. 

Counterfeit  sovereigns,  200, 

Counterfeiting  of  bank  bills  a  felony,  83. 

Coutts  &  Co.,  Messrs.,  209. 

Credit,  preservation  of,  281. 

Croly,  Dr.,  113. 

Cromwell,  protectorate  of,  24,  25,  30. 

— —  and  the  expulsion  of  the  Jews,  17. 

extract  from,  113. 

Cuba,  island  of,  surrendered,  130. 
Cumberland,  Duke  of,  dragged  from  his 
horse  by  the  mob,  225. 
Cunard  steamer,  first,  257. 


468 


Alphabetical  Index. 


Cunningham,  Allan,  description  of,  101. 
Currency,  metallic,  208. 

dangers  of  a  fettered,  389. 

— —  speech  upon  the,  149. 

theories,  374. 

bill,  167,  178. 

■  contraction  of  the,  173. 

contraction  of  four  millions  of,  178. 

aggregate,  184. 

want  of  a  secure  small,  203, 

bill,  Mr.  Peel's,  207. 

evil  of  an  imlimited,  193. 

opinions  on  the,  214. 

views  on  the,  349. 

metallic,  in  the  United  States,  240. 

Cutlery  manufactured  at  Sheffield,  131. 
Cutting  machine,  303, 

Dalrymple,  Sir  John,  extracts 
from,  34,  37,  43. 
Darien  Company,  33. 

the  projector  of,  33. 

departure  for,  35. 

expedition,  35. 

D'Arjuzon,  Marie  Rosalie,  268. 
Darlington  Bank,  forgeries  on  the,  102. 
De  Foe's  "Robinson  Crusoe"  issued,  66. 
Delusion  of  1824,  187. 
Denmark,  loan  contracted  for  in,  1824, 

207. 

Depreciation  of  paper  currency,  148. 
Deputy-governor,  death  of,  at  Namur,  45. 

qualification  of  a,  307. 

De  Yonge,  case  of,  146. 
Dictionary  of  commerce,  175. 
Directors  of  the  bank,   qualification  of, 

119. 
Disaffection  of  1830,  221. 
Discount  on  foreign  bills,  42. 

obtained  with  difficulty,  192. 

of  the  bank  from  five  to  fifteen  mil- 
lions, 197. 

bank  raises  them  to  5  percent.,  198. 

bank  notes  at  a,  47. 

diminution  of,  118,  123, 

extension  of,  126. 

D'Israeli,  extract   from  his    "  Genius  of 
Judaism,"  14. 

extract  from,  1 8. 

Dividends  unclaimed,  140. 
Dividend,  reduction  of,  170. 
Dixon,  Joshua,  examination  of,  431. 
Dobree,  Mr.,  251. 

Dock,  canal,  <fec.,  companies,  projected  in 
1827,  206. 
Dodd,  Dr.,  executed  for  forgery,  94,  182, 
Dollars,  issue  of,  125. 

rise  in  the  price  of,  154. 

Dollar,  the  stamped,  rise  in  the  value  of, 

154. 


Doubleday's  life  of  Peel,  extracts  from, 

353. 

financial  history,  extracts  from,  158, 

160,  163,  191. 

review,  extracts  from,  118. 

Dublin  Linen  Hall  opened,  82. 
Du  Bourg,  155, 
Due  D'Orleans,  60. 
Dudley,  Lord,  extract  from,  187. 
Dundee,  advance  to,  217. 
^-^  exchange  bank  at,  in  1845,  399. 
Dundonald,  Lord,  acquitted  of  participa- 
tion in  the  stock-jobbing  movement,  157. 
Duty  on  salt  imposed,  48. 

East  India  annuities,  109. 

company,  Frencli,  69,  131, 

much  inconvenience  experi- 
enced from  the  directors  of  the  bank 
being  also  of  the,  56, 

balances  of  the,  238, 

the  advantages  of  the,  34, 

company's   charter    renewed,    131, 

172. 

houses,  failure  of,  256. 

Edward,  the  Confessor,  14. 
Edinburgh  Review,  extracts  from,   128, 
132,  133,  146,  147,  148,  150,  152,  153,. 
154,  167,  169,  171,  192,  193,  194,  198, 
221,  227,  229,  231,  234,  271,  273, 
^-^  exchange  banks  at,  in  1843,  399, 
Eldon,  Lord,  opinion  of,  102, 

speech  of,  152. 

Elford,  Sir  W.,  stoppage  of  the  bank  of, 

194. 
Elizabeth,  20. 

Engler  &  Co.,  forgeries  on,  269. 
English  post-office,  46. 
Engraving  on  steel  by  Heath  <fe  Perkins, 

172. 
Epigram  on  the  South  Sea  Company,  71. 
Epigrams  of  the  period,  72. 
Esdaile,  Messrs.,  creditors  of,  paid  in  full, 

252. 

one  of  the  directors  of  the  Royal 

British  Bank,  430. 
Establishment  of  lending  houses  at  Na- 
ples, 14. 
Everett,  Walker  &,  Co.  suspended  pay- 
ment, 194. 
Ewer,  Mr.,  105. 
Exchange,  bills  of,  17. 
on  Bremen,  July,  1837 — Feb- 
ruary, 1838,  255. 
on  France,  July,   1837 — Feb- 
ruary, 1838,  255. 

on   Hamburgh,  July,   1837 — 

February,  1838,  255. 
on  Holland,  July,  1837— Feb- 
ruary, 1838,  255. 
foreign,  192, 


Alphabetical  Index. 


469 


Exchange  on  London,  255. 

operation,  21. 

par  of,  191. 

royal,  20,  73,  107. 

with  Hamburg,  167. 

Exchanger,  office  of,  23. 

Exchequer  bills,  54,  57,  89,  111,  148. 

advanced,  111. 

circulated  by  the  bank,  52. 

interest  raised  on,  209. 

issued,  48. 

demands  on  the,  27. 

no  payments  made  by  the,  27. 

forgeries,  257. 

discount  of,  196. 

scene  on  funding,  166. 

tallies  at  a  discount,  48. 

Exportation  of  cotton  machinery  prohib- 
•i»  ited,  131. 

Exports,  British,  1818-1832,  214. 

1842-1847,  366. 

Extensive  speculation,  147. 
Extension  of  commerce,  106. 
Extraordinary  fluctuations  in  -wheat,  177. 

Fall  in  commodities,  253. 
Fast  general,  a  proclamation  for  a,  86. 
Fellowship  of  merchant  adventurers,  19. 
Fenn,  Mr.,  extract  from  his  English  and 
foreign  funds,  54. 
Fielding,  Sir  John,  house  destroyed  by  a 

mob,  96. 
Finance  committee,  139,  142. 
Financial  events,  1821-1840,  220,  294. 

1846-1850,  402. 

• 1851-1854,  415. 

1855-1856,  422. 

Flanders,  traders  of,  19. 
Fletcher,  Joshua,  a  forger  of  ■nnlls,  «tc., 

282. 
Florence,  269. 

Fluctuations  in  the  currency  of  Scotland, 
Foley,  Admiral,  155.  [147. 

Fonton,  Francis,  fraud  by,  108. 
Forced  contributions,  153. 
Foreign  loans  in  England,  186. 

list  of,  31. 

Forged  notes,  vxc  first,  91,  166,  227. 

increase  of,  98. 

Forger,  disguise  of  the,  99. 

detection  of  the,  103. 

Forgeries,  extraordinary,  of  Charles  Price, 

99. 

French,  231. 

will,  283, 

of  Austrian  notes,  232. 

Forgery  made  felony,  49. 

of  the  water  mark,  103. 

curious,  143. 

■ deaths  for,  143. 

of  deeds,  182. 


Forgery  of  bank  notes,  132,  271. 

of  Barnard  Turner,  174. 

of  Henry  Fauntleroy,  1 79. 

of  Burgess,  287. 

on  the  Darlington  Bank,  102. 

on  the  Roj-al  Bank  of  Scotland,  103, 

attempts  to  prevent,  228. 

first  punished  by  death,  182. 

increase  of,  227. 

opinions  as  to   the   punishment  of 

death  for,  229. 

mysterious,  441. 

prosecutions  for,  133. 

petition  against  hanging  for,  230. 

punishment  with  death  ceased,  182. 

Fox,  Mr.,  in  the  house,  122. 
France,  coup  d'etat  in,  403. 
forced  loan  of  600,000  000  francs, 

131. 

forced  paper  circulation  of,  392. 

regent,  D'Orleans  of,  60. 

revolution  in,  390. 

taxation  in,  226. 

national  bankruptcy  of,  65. 

Frankfort  black,  332. 

Fraud  of  Robert  Astlett,  134. 

stock  exchange,  155. 

Free  trade  with  Brazil,  46. 

origin  of,  299,  371. 

Freights,  rates  of,  to  Bombay,  1853-1834, 

416. 
to   Calcutta,   1852-1856,  414, 

416. 

to  Hong  Kong,  1853-1854,416. 

to  Melbourne,  1852-1856,414. 

to  New-York,  1852-1856,414. 

to  Odessa,  185.3-1854,  416. 

to  Port  Phillip,  1853-1854,416. 

to  Sydney,  1853-1854,  416. 

French  colonies,  the  fall  of  the,  92. 

East  India  Company,  46. 

failure  of  the.  131. 

forgeries,  232. 

prohibitory  tariffs,  46. 

revolution,  118. 

stratao;eni,  due  de  Choiseul,  301. 

Freshfield,  Mr.,249,  284. 
Frugality  Bank  proposed,  131. 
Fuller,  Mr.,  speech  on  the  currency,  149. 
Funds,  reduction  in  the,  273. 

Oarraway's  coffee  house,  the 

London  merchants  meet  at,  87. 
Gas  companies,  number,  amount  of,  capi- 
tal, (fee,  1827,  206. 
Gaspey,  extract  from  his  "  Pictorial  His- 
tory of  France,"  64. 
General  distress  and  riots,  131. 
Geoi'ge  I.,  the  accession  of,  58. 
Georgia,  colony  of,  charters  granted  to,  82. 
Gilbart,  Mr.,  remarks  of,  19. 


4V0 


Alphabetical  Index. 


Gilbart,  Mr.,  extract  from  his  "  History  of 
Banking,"  14,  41,  137. 

J.  "VV.,  testimony  of,  129. 

Glasgow,  advances  to,  217. 

commercial  exchange  company,  399. 

suspension  of  bank  in,  429. 

Glass,  plate,  Britisli  manufacturers,  94. 

first  factorj',  46. 

Goderich,  Lord,  rei)ly  of,  219. 
Godfrey,  Mr.  Michael,  38,  43,  45. 

extracts  from  a  pamphlet  of, 

40,  43,  45,  49. 
Gogel,  Kock  &  Co.,  forgeries  on,  269. 
Goldsmiths,  23. 

borrowers  and  receivers  of  money, 

25. 

beginning  modern  banking,  25. 

notes,  25. 

enormous  interest  of  the,  26. 

advantage  taken  by  the,  26. 

ruined,  28. 

opposition  to  tlie  bank,  38. 

jealousy  of  the,  45. 

Goldsmith's  family,  143. 

Gold  and  silver,  bullion  imported,  405. 

coin  exported,  405. 

currency,  amount  in,  151. 

over  production  of,  189. 

of  Guinea,  46. 

price  of,  from  1809  to  1821,  158. 

demand  for,  197. 

discovery  of,  in  New  South  "Wales, 

401. 

diminution  of,  108. 

influx  of,  from  California,  398. 

new,  coinage  of  England,  172. 

export  of,  255. 

supply  of,  405. 

wine  and  olive  joint-stock  company, 

Gordon,  Lord  George,  95.  [189. 

riots,  95. 

Gosling,  Messrs.,  179. 

Government,  answer  of  the,  377.       _ 

Governor,  qualification  of  the,  307. 

Goulburn,  Mr.,  259,  273,  275. 

Gower,  Lord  Leverson,  extract  from,  187, 

188. 

Nephews  &  Co.,  failure  of,  380. 

Gloomy  apprehensions  during  the  panic 
of  1793,  110. 
Glyn,  Mr.  George  Carr,  203. 
Messrs.,  liallifax,  Mills  <t  Co.,  268. 

270. 
Graham,  Sir  James,  remarks  of,  223. 

Cunningham,  266. 

Grain,  average  price  of,  1792  to  1815, 160. 

Great  fire  in  London,  46. 

Greece,  loan  contracted  for,  in  1824,  206. 

in  1825,  207. 

national  bank  of,  220. 

Gi'egorian  style  in  Great  Britain,  130. 


Grenfell,  Mr.  Tascoe,  165,  176,  188, 
Grenville,  Lord,  speech  of,  151. 
Gresham,  Thomas,  197,  205. 

the  abolition  of  loans  from  foreign 

states,  by  the  agency  of,  20. 

wealth  at  the  time  of  his  death,  21, 

Grey,  Earl,  recalled,  226. 
Grocers'  Hall,  where  the  Bank  of  Eng- 
land commenced  operations,  42. 

removal  from,  82. 

Grote,  Mr.  George,  203,  307. 
Grundy,  Nathaniel,  164. 
Guatemala,  loan  contracted  for,  in  1824, 

207. 
Guest,  William,  seized  for  filing  guineas 
and  making  them  light  weight,  93, 
Guineas,  circulation  of,  134. 

at  a  high  premium,  170. 

Gurney,  Messrs.,  203. 
Gurney,  Mr.,  protest  of,  207. 

Hackney-coaches,  first  licensed, 

46, 

Ilaes,  Mr.  David,  258. 

llamlaro  <fe  Son  contract  a  loan  for  Den- 
mark, 397. 

Sardinia,  400. 

Hamburg,  interest  in,  1857,  429. 

Hamburg,  correspondent  at,  106. 

rate  of  discount,  413. 

Hamilton,  Lord,  his  clause  respecting  the 
confining  of  the  dividend  of  profit  of 
the  bank,  154. 

Ilaukey,  Thomson,  address  of,  440. 

governor  of  the  bank,  extract  from 

his  speech,  335,  414. 

Harley's  scheme,  66. 

llarman,  Mr.,  197,  203. 

Hatfield,  John,  hung  for  forgery,  182, 

Hawkesburj',  Lord,  extract  from,  136. 

Hearth  money  voted,  46. 

Heathcote,  Sir  Gilbert,  55. 

Hebrew  banker,  first,  15. 

compulsory  bankers,  15. 

admission  into  England,  25, 

oppression  of  the,  16. 

defence  of  the,  15. 

possessors  of  wealth,  17. 

in  England,  23. 

expulsion  of  the,  17. 

return  of  the,  24. 

Hell-fire  club,  proclamation  against  the, 

73. 

Henry  IIL,  15. 

VII.,  reign   of,   great   advance  in 

commerce,  19,  23. 

VIII.,  reign  of,  circulation  debased, 

23. 

Hides  and  wool  trade,  origin  of,  13. 

History   of    banking,  Gilbart's,  extracts 

from,  15., 


Alphabetical  Index. 


4V] 


History  of  prices,  extract  from,  IGl. 
Hoarding  of  gold  in  Finance,  153. 

of  specie  in  England,  Scotland  and 

Ireland,  154. 
Hoares,  Messrs.,  30,  SS. 
Holland,  Earl  of,  24. 

Lord,  151,  153. 

Hong   Kong,  rates  of  freight  to,   1833- 
1854,  416. 
Horn,  Count  Antoine  Van,  62. 
Horner,  Mr.,  extract  from,  50,  145,  1';'2, 

410. 

resolution,  148. 

Houblon,  Sir  John,  the  first  governor  of 

the  bank,  83,  303,  329. 

House  of  Commons,  committee  appointed 

to  inquire  into  the  forgery  of  exchequer 

bills,  260. 
■  report  on  the  management  of  the 

bank,  306. 
Hubbard,  John  Gellibrand,  elected  depu- 
ty-governor of  tlie  bank,  415. 
Huddersfield,  advance  to,  217. 
Hudson  Bay  Company,  294. 
Hughes,  Mr.,  extract  from  liis  "  History 
of  England,  205. 
Human  <fc  Mappes  Fils.,  forgeries  on,  269. 
Hume,  extracts  from,  15,  22,  27. 
Hunton,  Joseph,  a  quaker,  suffered  death 
for  forgery,  182. 
Huskisson,  Mr.,  198. 

extract  from,  173, 177,  201,  202,  210. 

remarks  on  the  issue  of  more  notes, 

383. 
Imports  from  1818  to  1832,  214. 

from  1842  to  1847,  366. 

Improvement  of  the  stocking  loom,  130. 
Income  tax,  273. 

continuance  of  the,  367. 

Increase  of  luxury,  61. 
Industrial  associations,  80. 
Insurance  companies,  capital,  amount  of 
shares,  ifcc,  206. 
Interest,  first  forbidden,  14. 

allowed,  29. 

in  Hamburg,  1857,  429. 

in  London,  1857,  429. 

of  money,  15. 

in  New-York,  429. 

in  Paris,  429. 

rate  of,  30,  38. 

of  money  borrowed,  49. 

reduction  of,  58. 

banks  raise  their,  241. 

Invasion,  projected,  of  England,  51. 
Investment  companies,  capital,  number  of 
shares,  &c.,  1827,  206. 
Ireland,  government  of,  109. 

Mr.,  anecdote  given  by,  88. 

negotiates  a  loan,  109. 

Irish  famine,  372. 


Irish  linen  board  formed,  66. 
loan,  117. 

Ja.coMBii  societies,  120. 
Jacobites  still  numerous,  48. 

a  i^owerful  party,  81. 

Johnston,  Chevalier,  87. 

Joint-stock  companies,   185,  204,  205. 

banks,  215,  235. 

shares  of,  240. 

over-issues  of,  224. 

committee  on,  243. 

Jones,  Lloyd  &  Co.,  184,  226,  282. 

KiBBg:,  Lord,  a  letter  from,  150. 

demands  his  rent  in  gold,  152. 

Kinnear,  George,  the  originator  of  the 

Scotch  exchange  banks,  399. 

Knight's  Pictorial  History  of  England, 

extract  from,  28. 

ILiaBBCasIlirc,  important  bank  failures 

in,  381. 
Land  Bank,  had  done  mischief,  47. 

proposed  to  be  established,  32. 

over-investment  in,  412. 

Lane,  Son  &  Eraser,  stopped  paym't,  110. 
Law,  John,  69. 

history  of,  69. 

leaves  France,  65. 

■  popularity,  60. 

unpopularity  of,  65. 

resigns  his  office,  64. 

Lawson's   History   of  Banking,    extract 
from,  41,  90,  230. 
Lead,  prices  of,  1792  to  1815,  162. 
Legal  decision,  105. 

tender,  150,  253. 

Leonosa  wool,  prices  of,  l792to  1813,  162. 
Life-boat  first  launched  in  England,  131. 
Liverpool,  advance  to,  217. 

■ •  important  bank  failures  in,  381. 

•  suspension  of  banks  in,  429. 

Liverpool,  Earl  of,  176,  212. 

letter  of,  to  the  Gov.  of  Bank 

of  England,  210, 
Liverpool's,  Lord,  speeches,  202,  215. 
Livre,  or  pound,  in  France,  Avhat  it  con- 
tained, 309. 
Lloyd's,  Mr.,  opinion  respecting  the  pur- 
chase of  the  dead  weight,  175. 
Lloyd,  Mr.  Jones,  extracts  from,  298. 

—  242,  281,  298. 

• evidence  before  a  committee  of 

the  House  of  Commons,  281. 

Lewis,  estimate  of  the  reduction  of 

country  paper  in  1816,  184. 
Lloyd's  coffee  liouse,  London,  estab.,  94 
Loans  from  the  citizens,  20. 

during  the  shuttings,  219. 

to  government,  58,  84,  88,  137. 


472 


Alphabetical  Index. 


Loan,  forced,  ia  France,  of  600,000,000 
francs,  131. 

in  France,  fm.  the  opulent,  136. 

in  Germany,  115. 

loyalty,  112. 

Peruvian,  ISk 

West  India,  240. 

Lombards,  17. 

establishment  of  the,  1 T. 

of  England,  17. 

persecution  of  the,  18. 

property  and  estates  seized,  18. 

robberies  of,  22. 

by  the  Stuarts,  22. 

London  assurance,  73. 

shares,  73. 

and  County  Bank,  amount  of  deposits 

each  year,  1838  to  1861,  315. 
increase  in  deposits  in  1861, 

316. 
and  Westminster  Bank,  239,  247, 

251. 

amount  of  deposits  each  year, 

1834  to  1861,  315. 

incr'se  in  deposits  in  1861,  316. 

and  Joint-Stock  Bank   established, 

239. 

— amount  of  deposits  each  year, 

1837  to  1861,  315. 

^— incr'se  in  deposits  in  1861,  316. 

history  of  the,  315. 

bankers,  increase  of,  108. 

proceedings  of  a  meeting  of  the, 

22d  October,  1847,  381. 
— —  and  Paris  press,  136. 

bank,  proposed  to  be  established,  32. 

import  of  thnber,  1850-53,  411. 

interest  in,  1857,  429. 

business  conducted  by  foreigners,  1 3. 

Londonderry,   Marquis  of,  stoned  by  a 
mob,  225. 

important  communication  from,  381. 

Louisiana  granted  to  the  "  Company  of 
the  West,"  60. 
Lothbury  front,  304. 
Lottery,  first,  56. 
—^  first  grant  in  England,  46. 

loan  of  1694,  320. 

tickets.  56. 

Loyalty  loan  of  £18,000,000,  112. 
Lushington,  Mr.  Alderman,  125,  136. 
Lyndhurst,  Lord,  extract  from,  225. 

Hacaulay,  IVIr.T.Babing:ton, 

extracts  from,  27,  319,  345. 
Machine,  weighing,  303. 
Machinery  for  printing  the  notes,  306. 
Mackay,  Dr.,  extract  from,  61,  75. 
Mackintosh,  Sir  James,  228. 
Mackworth,  the  projector  of  the  "  Com- 
pany of  Mine  Adventurers,"  54. 


Macpherson,  extract  from,  94,  111. 
Maitland,  remarks  of,  18. 
Malmesbury,  Lord,  119,  112. 
Management  of  the  public  debt,  142. 
Manchester,  advance  to,  217. 

important  bank  failures  in,  381. 

Mandates  substituted  for  assignats,  131. 
Mania  of  1825,  190. 
Manning,  Mr.,  176. 

extract  from,  154. 

Mansfield,  Lord,  95,  96,  105. 

decision  of,  94. 

Mansion-house  meeting,  196. 
Manufacture  of  Irish  cambric,  82. 

carpets  commenced,  89. 

thread  and  gauze,  92. 

calico,  94,  131. 

brocade  at  Lyons,  130. 

Manufactures  in  Kussia'and  Denmark,  52. 

of  woollen  and  linen  cloths,  80. 

Maravedi,  a  Spanish  coin,  value  of,  309. 
Maritime  trade  of  England,  46. 
Marlborough,  Duch's  of,  assisting  Messrs. 
Child,  88. 

Duke  of,  assisting  the  bank,  52. 

victories  of,  57. 

Marsh,  Sibbald  &  Co.,  179. 

Martineau,  Miss,  remarks  on  the  railway. 

365. 
Mathison,  John,  fraud  of,  102. 
Maubert,  Mr.,  260. 

Maynard,  Thomas,  hung  for  forgery,  182. 
Melbourne,  rates  of  freight,  1852-56,  414. 
Mellish,  Mr.,  159,  262. 

declarations  of,  159. 

Merchandise,  comparative  prices  of,  1848, 
1849,  397. 
Merchant  Tailors'  Hall,  89. 
Merchants'  steel  yard,  18. 

Elizabeth  borrowed  of  the,  20. 

failures  of  the,  110. 

meeting  of  the,  122,  148. 

in  1825,  196. 

meeting  of  principal,  125. 

support  to.  111. 

of  London,  petition  from,  168. 

meeting  of  the,  123. 

Metallic  payments,  163. 
Meulemeester  &  Son,  attempt  of  forgery 

on,  269. 
Mexico,  loan  contracted  for,  in  1824,  206. 

in  1825.  207. 

Mines  of  Chili,  Brazil  and  Peru,  1 85. 
Mining  companies,  capital,  <tc.,  in  1827, 

206. 
Mint,  robbery  of  the,  23. 

■  expedite  the  coinage  at  the,  197. 

Miscellaneous  companies,  am't  of  shares, 
capital,  &c.,  in  1827,  206. 
Mississippi  scheme,  59. 
how  it  originated,  66. 


Alphabetical  Index. 


473 


Mississippi  scheme  near  its  accomplish- 
ment, 60. 
■  suspended  payment,  65. 

Mixed  currency,  the  question  of  a,  de- 
bated, 213 
Molesworth,  Lord,  extract  from,  76. 
Monetary  crisis  of  184Y,  387. 

failures,  50. 

pressure  in  1847,  379. 

Montague,  Basil,  extract  from,  182. 
Mont  de  Piete,  at  Paris,  established,  95. 
Montesquieu,  remarks  of,  15. 
Morland,  the  painter,  101. 
Moult,  Mr.,  reply  of,  249. 
Muslins  introduced  from  India,  46. 
Mutual  guarantee,  285. 

Nails,  first  made  by  machinery,  131. 
Naples,  loan  contracted  for,  in  1824,  206. 
Napoleon's  decrees,  148. 
National  debt,  345. 

^— reduction  of  interest  on  the,  89. 

1786  to  1816,  164. 

• doubled,  114. 

Bank  of  Ireland,  131. 

bank  of  credit,  brought  forward,  30. 

Neale  &  Co.,  bankers,  stopped  pajTnent, 

93. 
Neave,  Mr.  Sheffield,  deputy  governor  of^ 
the  bank,  424. 
Necker's  financial  statement,  131. 
New  associations,  year  1823,  191. 
Newcastle,  Duke  of,  86. 

mansion  fired  by  a  mob,  225. 

important  bank  failures  in,  381. 

New  companies,  71. 
Newland,  Mr.  Abraham,  143. 
Newmarch,  Mr.,  439. 
New  River  Company,  a  great  benefit  to 
the  English  people,  33. 
New-South  Wales,  discovery  of  gold  in, 

401. 

3^  per  cents,  220. 

4  per  cents  reduced,  238. 

5  per  cents,  holders  of,  238. 

Newton,  Sir  Isaac,  advises  the  re-coinage 
of  silver,  47. 
New- York,  interest  in,  1857,  492. 
— —  rate  of  discount,  413. 

rates  of  freight,  1852-56,  414. 

NichoUs,  Mr.,  extracts  from,  231. 

John,  forger  of  bank  notes,  143. 

Norman,  Mr.  Ward,  extract  from,  215, 253. 
North,  Loi-d,  extract  from,  104,  321. 
Northern  and  Central  Bank,  243. 

account  of,  246. 

application  for  assistance,  247. 

Northumberland  and  Durham  Bank,  fail- 
ure of,  431. 
Norwich,  advance  to,  217. 
Norwich  Bank,  run  on  the,  194. 


Notes,  issue  of  five  pound,  liO. 

under  five  pound,  124. 

for  one  and  two  pound,  124. 

for  one  pound,  202. 

country,  discredited,  110. 

circulation  of  one  pound,  132. 

preferred  to  gold,  164. 

small,  extinguished,  214. 

small,  213. 

stopped,  218. 

lost,  302. 

stolen,  300. 

Odessa,  rate  of  freight  to,  416. 
Oldham,  Mr.,  306. 

Oliver,  Mr.,  of  Liverpool.,  failure  of,  413. 
Origin  of  country  banks,  107. 
Ormond,  Duchess  of,  letter  to  Swift,  69. 
Overend,  Gurney  &  Co.,  petition  against 
death  penalty  for  forgery,  230. 
Overstone,  Lord,  extracts  from,  430. 
Oxford  and  Wolverhampton  line,  297. 
sagacity  of,  57. 

Paindry,  Count  dc,  forgeries  of, 

269,  270. 
Paine,  Thomas,  118. 
Palma,  Nardo  di,  14. 
Palmerston,  Lord,  letter  of,  427. 

on  public  afi^airs,  351. 

Palmer,  Mr.  Ilorsley,  183,  224,  260. 

Mr.,  opinion  of,  208,  254. 

Mr.,  pamphlet  of,  223,  242. 

Panama,  Isthmus  of,  33. 
Panic,  great,  93,  110,  210,  241. 

of  1845,  evil  effects  of  the,  297. 

of  1847,  373. 

Paparo  Aurelio,  14. 

Paper  as  compared  Avith  gold,  1809  to 
1814,  177. 
Paris  first  lighted  by  gas,  172. 

interest,  in  1857  492. 

rate  of  discount,  413. 

Parliamentary  inquiry,  75. 

speeches,  76. 

debates,  104,  235. 

reports,  1 24. 

Paterson,  William,  33,  37,  38,  39,  40,  45, 

discharge  of  claims  by,  34.  [52, 

scheme  of,  40,  325. 

Pay  Hall,  304. 
Peace  of  1815,  158. 

of  Ghent,  172. 

of  Ryswick.  29. 

of  Utrecht,  29. 

of  Aix-la-Chapelle,  29. 

of  Amiens,  29. 

133. 

rumors  of  approaching,  in  1856,  417. 

Peel,  Mr.,  170,  167,  163,  184. 

currency  bill,  165,  167,  168,  178. 


474 


Alphabetical  Index. 


Peel,  Mr.,  report  of,  164. 

Sir  Robert,  extract  from,  235,  358, 

36Y,  369,  376,  895. 

2*74,  213,   222,  272,  274,  281, 

437,  382. 

on  the  death  penalty,  230. 

speeches  of,  276,  281,  352,  355, 

428. 

on  the  bank  charter  act,  885. 

Penny-post  first  established,  46. 
Percival,  Mr.  Spencer,  141,  154. 
Perreau  Brothers  executed,  95,  152. 
Peru,  loan  contracted  for  in  1824,  206. 

1825,  207. 

Peruvian  loan,  186,  352. 
Peterborough,   chivalrous   achievements 

of,  57. 
Petty,  Lord  Henry,  new  plan  of  finance, 

141. 
Pitt,  Mr.,  109,  140,  159. 

maiden  speech,  105. 

communications  with,  115. 

demands  of,  123. 

treaties  and  subsidies,  113. 

Playing  cards,  stamp  duty,  130. 
Pole,  Sir  Peter,  194. 

'  &  Co.,  suspension  of,  194. 

Thornton  &  Co.,  assistance  by  the 

bank  to,  195. 
Police,  a  century  ago,  84. 
Political  causes  of  suspension,  127. 

riots,  221. 

unions,  225. 

Porcelain  first  made  at  Dresden,  52. 
Porter,  extracts  from,  214. 
Porter's  Progress  of  the  Nation,  extracts 
from,  366. 
Portugal,  loan  contracted  for,  in  1824,  206. 
Pound,  168. 

of  money,  what  it  was,  309. 

weiglit  of  silver  in  Scotland,  309. 

Preservation  of  credit,  95. 
Preserving  the  Rest,  policy  of,  128. 
Prescott,  Henry  J.,  governor  of  the  bank, 

Mr.,  248.  [415. 

Pretender,  51. 

conspiracy  of  tlie,  81. 

retreat  of  the,  87. 

Price,  Cliarles,  forgeries  of,  g9. 

Prices  during  panic  of  1847-48,  1857-58, 

489. 

extraordinary  rise  in,  437. 

— —  of  merchandise,  1848-49,  397. 

1848-56,  419. 

Property  tax,  141. 

Prosperity  of  the  country,  183. 

Protector's  descent,  25. 

Provinces,  alarm  of  the,  120. 

Provision  companies  projected  in  1827, 

206. 
Purchase  of  the  dead  weight,  173. 


^uas'tcrly  Review,  extract  from, 

204. 

Queen's  speech  in  joarliament,  November 

23d,  ]  847,  384. 

Quesnay,  one  of  tlie  originators  of  free 

trade,  299. 

Rnikes,  Ulr.  ISicliard  Mee,  239. 

governor,  failure  of,  239. 

Rail-road  companies  projected,  206. 
Railway  mania,  289,  363,  365. 

of  1845,  289. 

deposits,  299. 

reduced  one-half,  363. 

directors,  290. 

expenditure  of  1848-50,  421. 

picture,  291. 

prospectus,  291. 

no  risk  in  the,  295. 

stock,  prices  of,  1846-1856,  423. 

tricks  of  the  speculators  in  the,  293. 

private   property  invaded   by  the, 

294. 

secui-ity,  high  prices  of,  295. 

system  in  England,  221. 

in  Britain,  894. 

projects  by  leading  men,  296. 

Railways,  over  investments  in,  412. 
Ransom,  Mr.,  suit  of,  166. 
Rapallo,    Ernest,  forgery   of   exchequer 
bills,  259. 
Real  del  Monte  Association,  183. 
Rebellion  of  1745,  85. 

of  1715  checked,  58. 

Reduetion  of  the  funds,  273. 
Reform  bill,  1832,  214. 
Reign  of  terror,  136,  138. 
Revenue  of  Great  Britain,  from  1818  to 
1832,  214. 

1842  to  1847,  366. 

Ricardo,  Mr.,  on  a  metallic  standard,  178. 
Richards,  Mr.,  evidence   before  a  com- 
mittee of  the  House  of  Commons,  184. 

remarks  of,  201,  226. 

Riots  in  Lancashire  and  Yorkshire,  172. 

in  the  country,  199. 

Rise  of  Prices  in  1823-1825,  190. 
Robertson,  extract  from,  18. 
Robinson,  Mr.,  extracts  from,  209. 
Rochester,  Bishop  of,  seized,  82. 
Romilly,  Sir  Samuel,  228. 
Rothschild,  Mr.,  opinion  of,  203,  208. 
Nathan  Meyer,  on   death  penalty, 

230. 

death  of,  257. 

Route  to  China,  19. 

Royal  Bank  of  Scotland,  82,  126. 

British  Bank,  failure  of  the,  430. 

exchange,  Edinburgh,  130. 

Exchange  Assurance  Company,  177. 

obtain  a  chai'ter,  73. 


Alphabetical  Index. 


475 


Royal  exchanger,  the  office  of,  23. 

observatory,  Paris,  46. 

Run  on  the  bankers,  27. 
Russell,  Lord  John,  celebrated  letter  of, 

382. 

remarks  on  sugar  trade,  871. 

in  Parliament,  351,  353. 

reform  bill  by,  22-1. 

Russia,  loan  for,  39Y. 
Russian  ports,  blockade  of  the,  414. 
Rutland,  Duke  of,  copy  of  an  agreement 
with  the,  78. 

Saclievcs-eU,  Dr.  Henry,  55. 

Salomons,  Mr.,  242. 

■  Mr.  David,  extracts  from,  242. 

Sampson,  Mr.  George,   designer   of  the 
bank  building,  83,  803. 
Sanderson,  Mr.,  on  death  penalty,  239. 
Sardinia,  loan  of,  £3,500,000  in  1851, 400. 
Saville,  Sir  George,  104. 

extract  from,  104. 

Savings  bank,  208. 
Scarcity  of  money,  209. 

of  silver,  209. 

of  gold,  154,  114. 

Schuyler,  Robert,  forgeries  of,  413. 
Scotch  exchange  banks,  1845,  399. 

banks,  147. 

Scotland,  failures  in,  435. 

Royal  Bank  of,  126. 

Scott,  Sir  Walter,  210. 

Scottish  enthusiasm,  35. 

Scrope,  Mr.  Poulett,  extract  from,  285. 

Season  of  distress,  110. 

Securities,  public,  51. 

lowering  the  interest  on,  183. 

Sermon  at  St.  tPaul's,  by  Dr.  Sacheverell, 

55. 
Seven  years'  war,  and  national  debt,  29. 
Shaftesburv,  hint  to  Cliftbrd,  28. 
Sheffield,  advances  to,  217. 
Sheridan,  Mr.,  122. 
Shoe-buckles  introduced,  46. 
Sikes,  Snaith  &  Co.,  susp'd payment,  194. 
Silk,  culture  of,  in  Connecticut,  130. 
Sinclair,  Sir  John,  speech  of,  150. 
Sinking  fund,  original,  of  1786,  108. 

operation  of  the,  159. 

Slave  States,  production  of  sugar  in  the, 

371. 

trade  floxirishing,  46. 

Slavery,  encouragement  to,  371. 
Smee,  Mr.  W.  Ray,  261. 

extract  from,  106. 

Alfred,  287. 

Smith,  Adam,  299,  407. 

Edward  Beaumont,  259. 

Payne  &  Smith,  bankers,  90. 

Smollett,  extracts  from,  39,  49,  69. 
Snow,  Messrs.,  30. 


Snow,  Strahan,  Paul  &  Co.,  79. 
Soane,  Sir  John,    im2)rovements   in   the 
bank  by,  904. 
Social  condition  of  England,  170. 
Society  of  Arts,  227.  * 

Solari,  Angelo,  the  forger,  259. 
South  Sea  "fund,  28. 

68,  75. 

delusion,  58,  67,  73. 

scheme,  32,  59. 

bubble  commenced,  63,  75. 

directors,  69. 

stock,  74,  78. 

secret  committee,  7C. 

jiunishment  of  the  peculators, 

77. 

parliamentary  inquirj-,  75. 

company,  government  annuities,  SO. 

comj^any,  68,  80. 

originated,  52. 

bubble,  185. 

South  American  speculations,  160. 
Sovereigns,  coinage  of  half,  172. 

light,  calledin,  265. 

Spanish  funds,  240. 
Special  trains,  298. 
Specie  payments,  a  bill  limiting,  135. 

efforts  made  to  resume,  163. 

Speculations  of  1836,  231,  241. 

wildncss  of,  in  1823-1825,  190. 

Speech  on  the  currency,  149. 
Stamp  act,  for  America,  130. 

duties  in  Ireland,  131. 

105. 

Stamps,  composition  for,  155. 
Standard  of  A'alue,  new,  177. 
Stansfeld's,  Hamer,  letter  on  the  act  of 
1844,  424. 

from,  432. 

Stanhope's,  Lord,  resolution,  151. 

extract  from,  76. 

Staple,  merchants  of  the,  19. 
Steamboats  between  Glasgow  and  Belfast, 

172. 
Steam  engine,  improvement,  bv  Watt,  130. 
Steamship  Savannah  at  Li^'erpool,  172. 
Steel-yard  merchants,  18. 
Steele,  Sir  Richard,  extract  from,  75. 
Stocks,  fall  in,  51. 

jobbing,  48. 

exchange  fraud,  155,  157,  200. 

capel  court,  131. 

holders,  226. 

Strahan,  Paul  &  Co.,  79. 

Strikes  of  artisans  and  laborers,  410. 

Sugar  from  beet-root,  131. 

producers  of,  371. 

exclusion  of  slave-grown,  from  trade 

impracticable,  371. 
Susjjcnsion  bill,  limiting  the,  135. 
Sycee  silver,  272. 


476 


Alphabetical  Index. 


Tallies,  abolition  of,  102. 
Tallow,  prices  of,  1792  to  1815,  162. 
Tax  on  notes  and  bills  increased,  172. 

imposed  on  bachelors,  131. 

ftn  saddle  and  coach  horses,  131. 

income,  levied  in  England,  52. 

proposed,  131.  [130. 

new,  levied  on  houses  and  windows, 

on  coal,  46. 

Taxes,  indirect,  repeal  of,  367. 

nominal,  158.  [303. 

Taylor,  Sir  Robert,  architect  of  the  bank, 
Tea  becoming  known  in  England,  46. 
Tench,  Nathaniel,  53. 
Thompson,  Mr.  Alderman,  236. 

Mr.  Poulett,  196,  240. 

Thornton,  Mr.  Henry,  124,  129,  145,  202. 

Samuel,  128. 

Timber,   importation   of,    into    London, 
1850-53,  411. 
Times,  action  for  libel  by  Bogle,  270. 

tribute  to  the,  271. 

extracts  from,  296,  299. 

first  printed  by  steam,  172.       [444. 

comments  of  the,  195,  295,  296,406, 

Tin,  prices  of,  1792  to  1815,  162. 

plate  first  made  in  England,  82. 

Tindal,  extract  from  Rapin's  History,  15. 
Tobacco  monopoly,  46. 
Tocqueville,  M.  de,  extract  from,  62. 
Tokens,  issue  of  bank,  164. 

extensive  circulation  of,  154.    [260. 

Tomkins,  Mr.,  and  forged  exchequer  bills, 

Tonnage  Bank,  326. 

Tooke.  Mr.,  extracts  from,  160,  161,  189. 

Thomas,  439. 

Trade,  the  position  of.  111. 

dangers  of  free,  389. 

embarrassments  of,  384. 

export  and  import,  126. 

opened  with  the  peninsula,  160. 

at  a  stand,  197. 

Trading  companies  projected  in  1827,  206. 
Traffic  in  one  and  fire  pound  notes,  144. 
Treasury,  credit  of  the,  maintained,  114. 

bills,  117. 

Trial  respecting  a  forged  note,  166. 

of  Barber,  285. 

Turkey,  first  ambassador  from,  131. 
Turner,  fraud  of,  174. 

Union    Bank  of  l.ondou,  in 

1840to  1861,  315.  [1861,316. 

United  States,  claims  on  the  firms  in  the, 

grain  from  the,  413.  [255. 

suspension  by  banks  in,  429. 


Unity  Bank  of  London,  1851  to  1861,  315. 

in  186!,  316. 

Usury  Laws,  alterations  of  the,  238,  286. 

restrictions  removed,  245. 

relaxation  in  the,  continued,  286. 

Van  dec,  Countess,  forgeries  of, 

269. 
Van  Horn,  trial  of,  62. 
Valpy,  Richard,  review  of  the  bank  by, 

fate  of,  63.  [436. 

Vansittart,  Mr.,  176. 

on  the  price  of  gold,  149. 

Vaughan,  Richard  "William,  the  first  for- 
ger, 91. 
Voluntary  contributions  for  the  war  in 
1798,  127. 
Voter,  qualification  of  a,  309. 

"Wag^eS,  advance  in,  401. 

loss  of,  410. 

Mr.  Horner  on  the  rise  of,  410. 

Walpole's  sinking  fund  act,  68. 

Mr.  Robert,  77. 

Sir  Robert,  and  the  bank,  ^4. 

and  "South Sea"  sufferers,  78. 

extract  from,  86. 

"War  with  France  and  national  debt,  29. 

of  the  Spanish  succession,  29. 

with  Spain,  29. 

Russia,  29. 

America,  98. 

France,  130.  [182. 

Ward,  Mr.,  M.  P.,  expelled  for  forgery, 
"Watt,  in  partnership  with  Boulton,  131. 
"Weguelin,  Thos.  Matthias,  elected  deputy 
governor,  415,  424. 
"Weighing  machine,  303.    , 
"Wellington,  Duke  of,  222,  225. 

residence  attacked,  225. 

unpopular,  221. 

Wentworth  &  Co.,  suspension,  193. 
"Western  Bank  of  Scotland,  failure  of,  431. 
"Westminster  Review,  extracts  from,  430. 
"Wharton,  Duke  of,  extract  from,  76. 
"Wiggin  &  Co  ,  suspension  of,  242. 
"Wildes,  Messrs.  Geo.  &  Co.,  failure  of,  242. 
"Wilkes,  Mr.  John,  97. 
William,  39. 

III..  28,  84. 

statue  of,  83. 

unpopularity  of,  39,  48. 

Will  forgeries,  282. 

Willoughby,  Sir  Hugh,  sail'd  for  China,  19, 
Wilson  <fe  Co.,  Thos.,  failure  of,  242. 
Wood,  Sir  Charles,  280,  428. 


Foreign  and  Domestic  Commerce,  Rail-Roads,  Canals,  Steam,  dec. 

PUBLISHED  SEPTEMBEK,  1859. 
A     NEW    AND     REVISED     EDITION     OF    THE 

Cyclopedia    of  Commerce 

AND    COMMERCIAL    NAVIGATION, 

By  J.  Smith  Homans,  Secretary  of  the  Cliamber  of  Commerce;  and  J.  Smith  Homans,  Jr., 
author  of  "An  Historical  and  Statistical  Sketch  of  the  Foreign  Commerce  of  the  U.  S." 
One  Volume,  8vo.,  2,000  pp.,  strongly  bound  in  muslin,. ...  $6 
Two  Volumes,  8vo.,  sheep,  2,000  pp., $8 

Tlie  first  edition  of  the  CYCLOPEDIA  OF  COMMERCE  having  been  exhausted,  and  a 
favorable  estimate  placed  upon  the  work  by  tlie  public,  we  have  deemed  it  important  that 
in  the  second  edition,  recent  commercial  changes  should  be  noticed,  and  that  leading  sta- 
tistics of  the  United  States  and  of  leading  countries  throughout  the  world  should  be  added. 

The  Editors  have  taken  pains  to  introduce  a  few  fresh  subjects,  and  to  substitute  new 
tabular  details  of  recent  date,  for  the  pages  contained  in  the  first  edition.  The  following 
articles  have  been  either  introduced,  re-written  or  enlarged : 

Average.     Average  Bond. 

Bahia,  Trade  ol  Baltimore,  Trade  of;  Banks  of,  1857-'59.  Bank  of  France,  Opera- 
tions of  1857-59.  Banks  of  the  United  States,  for  years  1858-59.  Banks  (Savings)  of 
Great  Britain,  United  States  and  France.  Bankruptcy  in  1858,  Statistics  of.  Belgium, 
Commerce,  Tariff,  Port  Regulations,  etc.,  of.  Board  of  Trade,  History  of.  Books,  Copjr- 
right  Law  of  Europe  and  United  States.  Boston,  Commercial  Statistics  of,  1858.  Bread- 
stuffs,  Statistics  of,  1857-58.     Buffalo,  Trade  of,  1858. 

Cadiz,  Trade  of,  1857.  Canada,  Finances,  Revenue, Debt  and  Trade  of,  1857-58.  China, 
Recent  Treaties  with.  Carpets,  Manufacture  and  Statistics  of.  Carriages,  Manufacture 
and  Statistics  ot  Charleston,  South  Carolina,  Commerce  of,  1850-58.  Chili.  Clearing- 
Ilouse,  Statistics  of.  1856-58.  Coal  and  Coal  Trade  of  Great  Britain  and  United  Slates. 
Coffee  and  Coffee  Trade,  1857-58.  Cotton  Crop,  1856-'o8.  Cotton  Consumption  and  Dis- 
tribution throughout  the  World.     Cuba,  Commerce  and  Finances  of,  1857-58. 

Denmark,  Commerce  and  Trade  of,  1857-'5S.    Elsineur. 

France,  (Jommerce,  Debt  and  Finances  of,  1S57-'5S. 

Genoa,  Commerce,  Harbor,  etc.,  of.  Germany,  Commerce., Manufactures,  etc.,  of.  Glass,  Statistics  of, 
l^'jT-'SS.  Great  Britain,  Commerce,  Manufactures  and  other  Statistics  of,  1857-'53.  Imports  and  Exports  of 
each  year,  Ib01-'5S. 

Hamburg,  Commerce  of,  lS6&-'58.  Hanse  Towns,  Commerce  of,  1S5&-'5S.  Hides,  Imports  and  Exports 
of,  1 853.     Hospitals.     Hospital  System  of  the  United  Stales. 

Ice.    Ice  Trade.    Insurance  (Life),  Statistics  of. 

Jamaica,  Commerce  and  Statistics  of.    Key  West,  Commerce  and  "Wreckers  of. 

Lace,  Manufacture  and  Statistics  of.  Leipsic.  Liberia,  Products  and  Commerce  of.  Lloyd's,  Sketch  of; 
Instructions  to  Agents  of.  ^.Louisiana,  Statistics  of,  1857-'53. 

Madeira.  Mahogany,  Production  and  Uses  of,  for  Ships,  etc.  Malta,  Population,  Commerce  and  recent 
Statistics  of.    Manufactures  of  the  United  States.    Marseilles,  Trade,  etc.,  of,  lS57-'58. 

Netherlands,  Commerce  of.  Newfoundland.  New-Granada.  New-York  State,  Commerce,  Trade,  Man- 
ufacture and  Banks,  1853.    New-York  City,  Debt,  I'opulation  and  Property,  lS57-'58. 

Paraguay,  Commercial  Relations  of.  Philadelphia,  Commerce,  Manufactures,  etc.,  of,  lS57-'53.  Philippine 
Islands.    Porto  Itico.    Providence,  Commerce,  Manufactures,  etc.,  of,  1857-'5S. 

Quebec,  Commerce, Trade  and  Shipping  of.    lUissia,  Commerce,  Trade  and  Shipping  of. 

Su  Christopher,  Kevenue  and  Commerce  of.  Sin  Domirgo,  Revenue  and  Commerce  of.  San  Salrador, 
Revenue  and  Commerce  of.  Sardinia,  Uevenue  and  Commerce  of.  Shipping,  Suggestions  by  the  Merchants 
and  Underwriters  of  New-York.  Sierra  Leone,  Palm  Oil  and  other  Trade  of.  Stadt  Dues.  Sugar,  Product, 
Consumption  and  Price  of,  each  year,  1815-185S. 

Tahiti,  Wh;iling  Trade,  etc.,  of.  Tea,  Crop,  Consumption  and  Price  of,  each  year,  1801-"5S.  Treaties, 
Commercial,  with  all  Nations.    Trieste,  Commerce.  Tonnage  and  Trade  of. 

Unile<l  States,  Commerce,  Banks  and  Shipping  of. 

Whaling,  Whale  Trade,  History  and  Statistics  of.  Wool,  Crop,  Exports  and  Imports  of  every  Conntry, 
each  year^  1840-'58.    Wrecks.    Wreckers.    Rules  of  Wrecking. 

Zoli-Veroin,  Manufactures  and  Trade  of,  1857-'53. 

'Ihe  Navy  Department,  by  order  dated  July,  lSo9,  has  directed  that  the  "Cyclopedia  of  Commerce"  bo 
added  to  the  list  of  books  furnished  for  the  use  of  Vessels  and  Navy  Yards  of  the  United  Stales. 

LIST  OF  MAPS  AND  ENGRAVINGS  IN  THE  CYCLOPEDIA  OF  COMMERCE. 

Chartof  New-York  Ray  and  Harbor.  Artesian  Wells.  Atlantic  Ocean.  Harbor  of  Bahia.  Harbor  of  Cape 
Town.  Harbor  of  Constantinople.  Dry  Docks.  Harbor  of  Elsineur.  Straits  of  Gibraltar.  Gulf  Stream.  Marine 
Dynamometer.  Heights  of  Waves.  Harbor  and  City  of  Havana.  Life  Boata,  Light  Houses.  Harbor  of 
Rio  Janeiro. 

The  Cy  lopedia  of  Comm«rcs.—"  Th'm  valuable  work  has  entirely  superseded  the  nse  of  MoCdxlooh's  Die- 
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"  Cvcl'opedia  of  Commerce."  the  latter  contains  very  copious  information  in  reference  to  the  great  staples  of 
tho'Uiiiied  Slates,  and  of  the  world  at  large  ;  the  Commerce  of  the  several  States,  &c,  brought  down  to  the 
year  \SbQ.  The  Cyclopsdia  Ir  now,  by  order  of  "he  Navy  Department,  adopted  as  the  text-book  for  the  naval 
service  of  the  United  States,  'i'he  new  and  revised  edition  of  1859  Is  particularly  acceptable  to  our  commer- 
cial and  p.auticaJ  ffiea,  tud  S  ko  easential  work  to  every  counting  room  and  to  every  merchant  ship." — If.  T. 
Courier  <fc  Enquiror. 

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Encyclopedia  Britannica. 


A  CYCLOPEDIA  OF  COMMERCE 


COMMERCIAL    NAVIGATION. 


P.dited  by  J-  Sjhth  Homaxs,  Corresponding  Secretary  of  the  Chamber  of  Com- 
merce of  the  Stat3  of  New  York,  and  Editor  of  "  The  Bankers'  Magazine 
and  Statistical  Kegister;"  and  by  J.  S:inTH  Homans,  Jr.,  B.S.,  Author  of 
''An  Historical  and  Statistical  Account  of  the  Foreign  Commerce  of  the 
</  S."     Koyal  Octavo,  2000  pages,  double  columns,  strongly  bound. 

TERMS. 

iluslin $6  00     I      Sheep  extra.     2  vols.       .        ,      $8  00 

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I'hii  work  is  a  compendium  of  commercial  knowledge,  including  articles  upon  the  trade  of 
©verv  im[)ortant  maritime  country  and  city  in  the  world;  copious  and  reliable  statistics  upon 
the  stajile  productions  of  every  climate;  essays  upon  commercial  subjects;  synopses  of  the  laws 
regulating  commerce;  and,  generally,  information  and  statistics  upon  every  important  com- 
mercial subject. 

The  want  of  a  comprehensive  commercial  work  of  this  kind  has  long  been  felt  in  the  United 

gtatea a  work  exhibiting  the  condition  and  resources  of  the  United  States  and  the  separate 

States,  as  Ttell  as  of  foreign  nations.  The  only  attempt  hitherto  made  in  this  country  to  supply 
the  want  of  such  a  work  was  the  reprint,  more  than  twenty-five  years  ago,  of  M'CulIoch's  Dic- 
tionary of  Commerce  and  Commercial  Navigation.  This  work,  probably  as  complete  in  reference 
>,o  the  commercial  statistics  of  foreign  countries  as  could  Ve  made  at  the  time  of  its  compila- 
tion, is  very  deficient  in  statistics  relating  to  this  continent,  particularly  of  the  United  States. 
The  later  editions  of  Mr.  M'CulIoch's  work  contain  much  matter  of  an  obsolete  or  local  charac- 
ter in  which  the  American  reader  feels  but  little  interest;  while  many  subjects  of  great  import- 
ance to  commercial  men  in  this  country  are,  in  the  English  work,  either  omitted  entirely  01 
mentioned  only  incidentally. 

The  extensive  and  important  changes  that  have  taken  place  within  the  past  ten  years  in  com- 
mercial affairs — the  establishment  of  new  States,  new  Territories,  new  commercial  places — the 
anexampled  increase  of  the  commerce  of  the  United  States,  of  the  development  and  the  recora 
oi  the  great  industrial  resources  of  the  United  States — all  seem  to  require  a  new  and  distind 
work,  with  a  view  to  place  before  commercial  readers  a  more  ample  account  of  the  progress  of 
commerce  throughout  the  world.  The  present  volume  has  been  prepared  with  a  view  to  sup- 
ply, in  part,  this  want;  and  while  we  have  aimed  at  presenting  a  fair  exhibit  of  the  finances,  the 
internal  and  foreign  commerce,  the  staple  products — of  each  State,  we  have  at  the  same  time 
gathered  together  the  latest  statistics  in  reference  to  the  products  and  the  commercial  relations 
of  foreign  nations:  especially  of  those  with  whom  the  United  States  have  the  most  intimate 
intorcoursp 


I 


A  Cyclopedia  of  Commerce  and  Commercial  Navigation. 

The  Cyclopedia  of  Commerce  and  Commercial  Navigation  contains  twenty-seven  hundre* 
fubjects,  among  which  will  be  found : 

I.  History  and  Statistics  of  Kail-roads,  Canals,  the  Post  OfEce,  the  Magnetic  Telegiaph, 
the  Express  Business,  Mercantile  Agency,  the  Fisheries,  Steam  Navigation,  Aqueducts,  Arte- 
sian Wells,  &c. 

II.  Elaboeatb  Articles  on  Average,  Adjustment,  Arbitration,  Abandonment,  Bottomry 
and  Eespondentia,  Afifreightment,  Barratry,  Charter  Party,  Convoy,  Contraband,  Carriers, 
Collision,  Salvage,  Demurrage,  Bills  of  Lading;  Marine,  Fire,  and  Life  Insurance;  Lloyds; 
Annuities,  Embargo,  Neutral  Trade ;  Navigation  Laws ;  Laws  of  Merchants,  the  Law  of  Ships, 
Shipping,  Seamen,  Owners  of  Ships,  Blockade,  Factors  and  Agents,  Stoppage  in  Transitu, 
Tonnage,  Pilots,  Privateerings  Quarantine,  Stranding,  &c. 

m.  History  and  Statistics  of  the  Coast  Survey,  Coasting  Trade,  the  Whale  Fishery,  Light* 
houses,  Life-boats,  Docks,  Harbors,  Breakwaters,  Sea  Soundings,  &c. 

rV.  The  Law  of  Bills  of  Exchange,  Promissory-Notes,  Guaranty,  Indorsement,  Interest, 
Usury,  Letters  of  Credit,  Exchange,  Commission,  Mortgages;  Partnership  (Special  and  Gen- 
eral), Contract,  Copyright,  Notaries  Public,  &c. 

V.  Elaborate  Articles  on  Winds;  Currents;  Charts;  Compass;  Gulf  Stream;  Atlantic, 
Pacific,  and  Ai-ctic  Oceans ;  Latitude ;  Longitude ;  Drift,  Tides,  Dry-rot,  Anchors,  Cables,  &e- 

VI.  History  and  Statistics  of  Wheat,  Flour,  Barley,  Eye,  Buckwheat,  Com,  Oats,  Cot- 
ton, Sugar,  Coffee,  Tea,  Chocolate,  Rice,  Brandy,  Wines,  Ale,  Beer,  Porter,  Molasses,  Whisky, 
Butter,  Cheese,  Opium,  Tobacco,  Salt,  Pork  and  Beef,  Provisions,  &c. 

Vn.  Elaborate  Articles  on  Money;  Weights  and  Measures;  Demand  and  Supply; 
Emigration,  Warehouse  System,  Bankruptcy  and  Insolvency ;  Credit,  Currency,  Fluctuations  in 
Prices ;  Laws  of  Commerce  of  all  Nations,  with  Laws  of  each  Century,  &c. 

VIII.  History  and  Statistics  op  Cotton,  Flax,  Linen,  Wool,  Hemp,  Hides,  Iron,  Coal, 
Copper,  Gold  and  Silver,  Tin,  Lead ;  Coins  and  Coinage,  Furs  and  Fur  Trade ;  Leather,  Indi- 
go, Guano,  Gums,  Drugs,  Acids,  Fruits,  Oils,  &c. 

rX.  History  and  Statistics  of  the  Cotton,  Lace,  Linen,  and  Woolen  Manufacture ;  Car- 
pets, Shawls,  Clocks  and  Watches,  Carriages,  Boots  and  Shoes ;  Fire-Arms,  Silks,  Paper, 
Hardware,  Fans,  Gutta  Percha ;  Ice  Trade ;  Gas ;  Manufacturing  Woods ;  Timber  Trade ; 
Adulteration  of  Food ;  Porcelain,  Inks ;  Hosiery,  Glass,  Starch,  Cordage,  Clothing,  &c. 

X.  Elaborate  Articles  oy  Banks,  Banking,  and  Commerce  (Ancient  and  Modem),  East 
India  Co. ;  Credit  Mobilier,  Funds ;  Pubhc  Debt ;  Finances  and  Commerce  of  each  State  ;  Buc- 
caneers and  Pirates ;  Commercial  Treaties  of  all  Nations  (Ancient  and  Modern),  Tariff,  Slave 
Trade ;  Free  Trade,  Smuggling,  Population ;  Clearing-House,  Savings'  Banks,  Pawnbrokers ; 
Consuls  and  Consular  Duties,  Joint  Stock  Companies ;  Hudson's  Bay  Co.,  Colonies  and  Coloni- 
al System ;  Commerce  of  all  Nations ;  Commerce  of  leading  Ports  throughout  the  World ;  Cir- 
cumnavigation, Exploring  Expeditions  ;  Zollverein,  &c. 

XI.  Notices  of  Anderson,  Arkwright,  Arrowsmith,  Bougainville,  Bowditch,  Bykox 
'Admiral),  Cabot,  Cavendish,  Columbus,  Cook,  Coutts,  Dampier,  D'Anville,  Drake, 
Feesnel,  Feobisher,  Fulton,  Vasco  da  Gama,  Gresham,  Gunter,  Gutenbueo,  Hudson, 
Jacquaed,  Jahes,  De.  Kane,  Kepleb,  John  Law,  Macadam,  Mauey,  Meecatob,  Napieb, 
Iasman. 

XII.  List  op  Twenty-six  Maps  and  Engravings  in  this  Work:  Artesian  Wells,  Cap- 
stan, Basin  of  the  Atlantic  Ocean,  Harbor  of  Bahia,  Harbor  of  Boston,  Harbor  of  Constanti- 
Hople,  Dry  Docks,  Harbor  of  Elsineur,  Straits  of  Gibraltar,  Gulf  Stream  and  Drift,  Marino 
Dynamometer,  Heights  of  Waves,  Harbor  and  City  of  Havana,  Life-boats,  Light-houses,  Har- 
bor of  Eio  de  Janeiro. 


Published  February,  1862. 


THE 


MERCHANTS  AND  BANKERS 


ALMANAC, 


18    6    3 


CONTAINING 


I._A  List  of  the  Banks,  arranged  alphabetically,  in  every  State  and  City  of  the  Union,  January,  1S62 

Names  of  President  and' Cashier,  ami  Capital  of  each. 

jX__A  List  of  Private  Baalcers  in  Three  Hundred  and  Fifty  Cities  and  Towns  of  the  U.  S. 
jj£'_^lntiabetical  List  ot  Sixteen  Hundred  Cashiers  in  the  United  States. 
jy]_A  List  of  the  Banlis  in  Canada,  New-Brunswick  and  iJova  Scotia— their  Cashiers,  Managers  and 

Foreign  Agents. 
Y._Governor,  Directors  and  Officers  of  the  Bank  of  England,  186L 
TI— List  of  Banks  and  Bankers  in  London,  December,  liCl. 
Yjj'_List  of  Bankers  in  Europe,  Asia,  South  America,  Australia,  "West  Indies,  &c. 
YIIl'—Lowest  and  Highest  Quotations  of  Stocks  at  New-York,  each  Month,  1S6L 
j-sj;_jjistory  of  the  Mint  otthe  United  States,  and  Statistics  of  the  Coinage. 
X.— Quotations  of  Foreign  Exchange  at  JS'ew-York,  each  Montii,  ISGl. 
XL— The  Usury  Laws  and  Laws  ot  Damages  on  Bills,  of  each  Slate  in  the  U.  8. 
X[[|_The  Banks  of  New-York— Names  of  President,  Vice-President,  Cashier  andNotary. 
XIIL— Historical  Sketch  of  Earlv  Baakingln  the  City  of  New-York. 
XIV.— The  Cotton  Crop  of  each  Year,  and  Foreign  Exports,  1S5S— 1S61. 
XV.— Kail-Eoads  of  each  State,  Length,  Cost,  &c..  January,  1861. 
XVL— Table  of  the  Values  of  all  Foreign  Gold  and  Silver  Corns  in  U.  S. 
XVIL— Annual  Pveport  on  Breadstuffs  Trade  of  the  U.  S.,  year  1S61. 

XVIII.— The  Census  of  the  United  States,  ISGO.  and  of  the  year  IboO.  ,„     ,       „  /^     .     • 

XIX.— Commercial  Events  of  the  Sixteenth,  Seventeenth,  Eighteenth  and  Nineteenth  Centuries. 
XX.— Annual  Report  on  Sugar  and  Coffee  Trade  of  the  U.  S.  and  Europe,  18o8— 1861. 
XXL— Historical  Sketch  of  the  Tariffs  of  the  United  States,  1800—1861.     . 
XXII.— Outlines  of  a  Plan  for  a  Bank  of  the  United  States. 


',a  ht  ConihtujtJr  ^nunallg. 


PUBLISHED  BY 
J.   SMITH  HOMANS,  Jr.,  OFFICE  OF  THE  BANKERS'  MAGAZINE, 

Chambee  of  Commekck  and  Undeewkiteks'  BtriLDixa,  Nos.  61  &  63  "William  Steeet,  N.  T. 

1862. 

Copies  mailed  to  order — Price  $1  25. 


IMPORTANT   FINANCIAL   DOCUMENTS. 
Published  in  the  Bankers'   Magazine  and  Statistical  Register, 

[77(6  oifioial  orgatb  of  the  Americati  Geographical  and  Statisiical  Societyl  for  the  year  1862. 

1.  Financial  Scheme  for  tlie  Government.  Kead  before  the  American  Geographical  and  Statistical  So- 
ciety. The  Wants  of  tlie  Treasury— Capital  Abimdunt  for  a  well-framed  and  Chartered  Institution— The 
Example  of  Great  Britain  worthy  of  Ado|)tion— Paper  Money  essential  to  the  operations  of  the  Governn>ent 
and  of  the  People— A  Proposed  Capital  of  One  Hundred  Millions  of  Dollars— Capital  Payable  in  Instal- 
ments—Branch BaiiiliS  for  the  States— Gradual  merpcinc;  of  State  Bank  Paper  with  that  of  the  Government 
— A  Fiscal  Institution  necessary  to  the  equalization  and  uniformity  of  Domestic  Exchanges  and  of  the 
Currencv. 

2. 


oft 

Bank,  Union  Bank,  Bank  of  America,  &c 

3.  Finances,  Kevenues  and  Taxation  of  the  United  States.— Special  Eeport  to  the  American  Geographical 
and  Statistical  Society,  New-York,  January  IGtIi,  1862,  with  the  Tables  of  British  Excise,  Taxation,  Stamps 
&c.,  and  Bevenue  from  every  source  for  fifieen  years.  ' 

4.  A  Few  Plain  Words  to  England  and  her  Manufacturers.— 1.  On  the  United  States  as  a  Market  for  her 
Goods.  2.  On  the  Commerce  and  Population  of  the  North,  compared  with  the  South.  Bead  before  the 
American  Geographical  and  Statistical  Society,  Ke«-York,  by  I.  S.mitu IIo.mans. 

AdditioiAal  ©ocMzssesBts  oai  Basakiaig,  Fiuaiscc,  Ac. 

.•5.  History  of  tlie  Bank  of  England  By  John  Fraxcis,  with  additions,  bv  I.  Smitu  IIomans.  [The 
wliole  of  this  valuable  History  will  be  comprised  in  tlie  Bankers'  Magazine  for  1S62.] 

6.  '•  Some  Objections  to  Government  Demand  Notes  "  Considered— Provisions  of  the  Constitution  as  to 
Bills  of  Credit  -Effects  of  Inflation  of  Paper  Currency- Revulsions  of  1S8T  and  1S57— Bank  Capital  of  1834- 
1S37— Is  the  Creation  of  Paper  Money  a  new  function  of  Government?— Bank  Circulation  of  Great  Britain 
less  now  than  in  1S44 — Paper  Money  should  not  be  Created  for  Individual  Profit— Discordant  Banking 
Policy  of  tlie  several  States— •' Confederation"  of  Banks— Failures  of  Western  Banks  in  1S61— Views  ol" 
Eininent  Statesmen  and  Writers — Superiority  of  a  Government  Circulation  over  Bank  Paper — Conflict  be- 
tween Government  Credit  and  Private  Credit. 

7.  Financial  Policy  of  the  Government.— 1.  Considerations  on  a  Special  National  Loan,  in  connection 
with  a  National  Circu!-ating  Medium.  2.  Investigation  and  exposition  of  the  qualifications  which  consti- 
tute Money,  and  of  the  true  principle  which  ought  to  be  the  basis  of  Paper  Money.    By  L.  Bonnefoux. 

8.  Finuicial  Keview  of  the  Year  1861 — Banks,  Exchanges  and  Stocks. 

9.  A  Currency  of  Treasury  Notes— Kemarks  in  favor  of  a  Currency  of  Treasury  Notes— A  Eeply  to  "  Some 
Objections  by  a  Bank  Officer." 

10.  National  Taxation  and  Bevenue— The  Sources  of  Taxation— Comparison  of  Taxation  In  Europe  with 
that  of  the  United  States— France— Great  Britain— War  Taxes  of  England  la  1800-1810- Progress  of  Taxa- 
tion in  fifty-eight  years— England,  Europe  and  the  United  States — Tax^^e/'  capita — England's  Tax  in  ISOO 
— liritisli  Customs  Duties— Sugar  Tax— Consumption  of  Tea— Tobacco— War  Taxes  of  1812-1815 — The 
Great  Problem. 

11.  Gold  and  Paper.— Gold  and  Silver  Coins,  Treasury  Notes,  Bank  Bills  and  Bills  of  Credit,  considered 
ia  contiection  with  Federal  Taxation  and  Loans. 

12.  Plan  for  a  National  Currency,  Based  on  the  pledge  of  Certificates  to  be  issued  for  a  Special  National 
Loan.     Uy  L.  BoNNEFoux. 

13.  The  History  of  American  Coinage.  By  John  H.  IIickoox.  With  Engravings.  Coins  of  Colonial 
Period:— 1.  Massachusetts.  2.  Maryland.  3,  Carolina.  4.  Other  Colonies.  5.  The  Confederation.  G. 
Connecticut.     T.  New-Jersey. 

14.  The  Duties  and  Liabilities  of  Bankers  to  their  Dealers,  in  Collecting  Paper.    With  recent  decisions. 

15.  Fiuincial  and  Commercial  events  in  Europe  In  the  year  1800;  with  a  List  of  New  Companies  estab- 
lished in  Great  Britain,  and  Prominent  Failures. 

16.  T!i3  Usury  Laws  of  each  State,  and  Damages  on  Bills  of  Exchange. 

IT.  The  Banking  Systems  of  Europe.— 1.  France.    2.  Germany.    3.  Austria.    4.  Russia. 

18.  A  Summary  View  of  the  Foreign  and  Colonial  Loans  negotiated  in  London,  and  Bank  of  England 
Rates  of  Discount,  during  the  year  1860.  2.  Foreign  Exchanges  in  London  from  1841— 186U.  3.  Gold  and 
Silver  Movement  of  the  year.  4.  Movement  of  the  Bank  of  France,  years  1S5T— 1860.  5.  Note  Circulation 
of  Great  Britain,  years  1850—1860.  6.  Bank  of  England,  1859—1860.  7.  English  Customs  Duties 
1856—1360. 

19.  Legal  Miscellany.— 1.  Redemption  of  Bank  Bills.  2.  Counterfeit  Cents.  3.  Redemption  of  Bank 
Bills.  4.  Bank  Notes  on  Special  Deposit.  5.  Notice  of  Protest.  6.  Negotiable  Paper  in  Illinois.  7.  Pre- 
sumption— Surety — Agency.     8.  Promissory  Notes.     9.  Usury.     10.  Assignment — Fraud. 

20.  The  Causes  of  Bank  Failure.— 1.  Overtrading,  2.  Neglect  of  Specie  Reserves.  3,  Further  Legisla- 
tive Restraints  necessary.    4.  Official  Reports  of  the  Albany  l;anks. 

21.  T.ie  Finances  of  the  United  States. — 1.  Existing  Public  Debt.  2.  Additional  Sources  of  Revenue. 
8.  Debt  pe/*  crtp/^^a,  1816  and  1861.  4.  Direct  Taxes.  5.  Duties  on  Tea,  Coffee  and  Sugar.  6.  Brftish  and 
American  Taxation  compared.  7.  Treasury  Nijtes.  S.  Opinionsof  Secretaries  Hamilton,  Dallas,  Craw- 
ford, Wood  uury  and  Spencer. 

22.  The  National  Debt  of  Great  Britain,  funded  and  unfunded,  each  year,  1691  to  1860,  and  the  Annual 
Intere-^t  each  year. 

23.  p.  "litical  and  Social  Economy.  By  JohnTTillBukton.  1.  Productions  of  Industry.  2.  The  Depart- 
ments of  Labor.  3.  Laborers  t'«/'.S7i.s  Drones.  4.  Co-operation  in  Labor.  5.  Freedom  of  Trade  in  the  Cur- 
rency.    6.  Permanency  or  Stability  in  the  Currencv.     7.  The  Obligations  of  Government  as  to  the  Currencv. 

24.  Gold  and  tlie  Exchanges— The  Effect  of  the  Gold  Supplies  on  the  Foreign  Exchanges  between  tile 
United  Ki'igdom  and  Foreign  Countries,  and  on  the  Price  of  Silver.  Bv  Francis  Jourdan.  .  [Read  before 
the  Statistical  Society  of  London,  19th  February,  1861.] 

2.5.  The  Par  is  Stock  Exchange— Those  Rogues  of  Stockbrokers— Ces  Coquins  d' Agents  de  Change.  Par 
Edmond  AnouT. 

28.  The  Financial  and  Commercial  System  of  France— The  Official  ^'./•po.se' of  the  Situation  of  the  French 
Empire,  made  to  the  Senate  and  Corps  Legislafif,  1861— Their  System  of  Direct  Taxes,  Public  Works, 
Registry  and  Domains,  Forests,  Commerce,  Agriculture,  Commercial  Reforms,  Maritime  Ports,  Eailwavs, 
Mines,  .fee. 

27.  The  Pawnbrokers  of  Paris— Description  of  the  Mont  de  Piete.  By  E.  About.  1.  What  the  Mont  de 
Pi6t6  is.  2.  Early  History.  3.  Reverses.  4.  Borrowing.  5.  Selling  off.  6.  The  Customers.  7.  The 
Commissioner's  Duties.  8.  Profits.  9.  Innovations.  10. "Victims  of  Usury.  11.  Troubles.  12.  Past  and 
Present  Condition.    The  Pawnbrokers' Bank  of  Dantzic. 

28.  The  Great  Fra'ids  of  late  years  in  England:—!.  Walter  Watts.  2.  John  Sadlier.  3.  The  Royal 
British  Bank.    4.  William  James  Robson.    5.  Leopold  Redpath.    6.  Colonel  Waugu  and  others. 


A    BANK    LI  BRARY 

FOK    ONE    HUNDRED    DOLLARS. 


1.  Manual  for  Notaries  Public  and  Bankers,  with  late  cases,  1  vol.  8vo.,  $2  00 

2.  The  Banker's  Common  Place  Book,  by  Gilbart,  McCullocii,  &c.,  1   00 

3.  Story  on  the  Law  of  Promissory  Notes,  Guaranties,  &c., 5  50 

4.  Story  on  the  Law  of  Bills  of  Exchange,  Foreign  and  Inland, 5  50 

5.  Kent's  Commentaries  on  American  Law,  ninth  edition,  4  vols.,. ...  16  00 

6.  The  Banking  System  of  the  State  of  N.  Y.,  &c.,  by  John  Cleaveland,  4  00 
1.  A  Treatise  on  the  Law  of  Bankers  and  Banking,  by  James  Grant,  3  00 

8.  The  Laws  of  Business  for  Business  Men,  by  Professor  Parsons, 3  50 

9.  Chitty  on  the  Law  of  Bills  of  Exchange,  Promissory  Notes,  (fee.,. . .  6  00 
10.  The  Cyclopedia  of  Commerce,  one  vol.  Bvo.,  2,000  pp.,  new  edition,  6  V5 

/  11.  The  Merchants  and  Bankers'  Ptegister,  1852—1860,  8  vols., 8  00 

12.  TheBankers'MagazineandStatisticalRegister,4vols.,  1856— 1860,  24  00 

13.  The  Banks  and  Clearing-House  of  New-York,  by  J.  S.  Gibbons,.  . .  1   50 
_  14.  Clarke's  History  of  the  Bank  of  the  United  States, 5  00 

16.  Digest  of  the  Laws  of  the  United  States  to  1859, 7  00 

16.  Trotter's  History  of  the  Debts,  &c.,  of  the  several  States  and  U.  S.,  4  00 

-'- 17.  The  Ways  and  Means  of  Payment,  by  S.  Colwell, 3  00 

18.  Historical  and  Statistical  Account  of  Foreign  Commerce  U.  S., 2  00 

J^"  Uvery  Bank  and  Banking-Boom  should  be  furnislied  with  copies  of  standard  works  on  the 
history^  p'inciples  and  statistics  of  Banks,  foreign  and  domestic,  for  th&  use  of  Bank  Directors, 
OMcers  and  Clerks. 


Periodicals  supplied  at  the  office  of  the  Bankers'  Magazine. 

A         77  With 

Annually.       ^^^^,,,.,,  Magazine. 

London  Quarterly  Review, $3  00  or,  $7  00 

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Orders  may  be  addressed  by  mail  to 

J.  SMITH  HOMANS,  Jr., 

Office  Bankers'  Magazine  and  Statistical  Register, 

JVetV'  ITorh. 


IMPORTANT  BANKING  DOCUMENTS 

FOR    THE   USE   OF 

BANK   OFFICERS,  DIRECTOES,   PRIVATE  BANKERS,  &c. 

Contained  in  the  new  Volume  of  the  Bankers'  Magazine,  July,  1859— June,  1860. 

Copies  of  the  Volume  supplied  to  order,  in  Numbers,  $5,  or  substantially  bound,  $5  75. 


I.  A  SOUND  CURRENCY.— What  is  it?  Hints  concerning  the  evils  that  result  from  falsification  of  the 
Currency.    By  JojiN  H.  Hunt.    Read  before  the  2sew-York  Board  of  Currency. 

II.  THE  MORALS  OF  TRADE.— 1.  Bank  Directors  and  Stockholders.  2.  Fraudulent  Bills  ofExihange. 
3.  Over  Trading.  4.  Adulteration  of  Food.  5.  Causes  of  Fraud.  6.  Remedies  Proposed.  (From  the  Weit- 
minster  lieview,  April,  1859.) 

III.  THE  CHIEF  METALS  OF  THE  'WORLD.— 1.  Copper.  2.  Tin.  8.  Lead.  4.  Gold.  5.  Silver. 
6.  Platina.    7.  Zinc  and  Antimony.    8.  Mercury.     9.  Arsenic.    10.  Gems.    11.  Pewter. 

IV.  REMARKS  ON  THE  PRESENT  CURRENCY  SYSTEM.— Prepared  for  publication  during  the 
Panic  of]  857,  and  read,  by  request,  before  the  Currency  Reform  Association  of  New- York,  July  C,  1859.  By 
Mr.  Peter  Coopee. 

V.  THE  FUTURE  VALUE  OF  GOLD.— 1.  Money,  a  medium  of  exchange.  2.  Conditions  which  deter 
mine  the  value  of  money.  3.  Effect  of  new  discoveries.  4.  Ditference  between  coin  and  bullion.  5.  Influ- 
ences which  prevent  a  diminution  in  value.  6.  Consequences  of  a  diminution  in  value.  7.  Case  of  the  Eng- 
lish fundholders. 

VI.  NEW-Y'ORK  CITY  BANKS.— Capital,  circulation,  profits,  deposits,  bank  balances,  loans,  stocks, 
bonds  and  mortgages,  real  estate,  cash  items,  tpecie  of  each,  June  35. 

VIL  CURRENCY,  BANKING  AND  CREDIT.-Bv  James  S.  Ropes,  Esq.,  of  Boston. 

VIII.  ANNUAL  REPORT  ON  'I  HE  NEW-YORK  ASSAY  OFFICE.— Coins  of  the  United  States- 
Fluctuations  in  Prices — California  Trade. 

IX  SAVINGS  BANKS.— Comparative  table  of  deposits  in  the  City  and  State  of  New- York,  for  each 
year.  1S56,  1857,  185^,  1859. 

X.  FKAUDS  ON  LIFE  INSURANCE  COMPANIES.— The  great  French  Insurance  Frauds. 

XL  BANK  FINANCIKKING  IN  PKNN8VLVANIA.— Frauds  on  ihe  Monongahela  Valley  Bank 

Xir.  GOLD,  SILVER  AND  FREE  TRADE— With  Staiistics  of  Product  of  Gold  and  Silver  in  all  coun- 
tries of  the  World,  1849  -1SS9. 

XIII.  RATES  OF  FOREIGN  EXCHANGE, each  week,  January,  1855,  to  December,  1858. 

XIV.  FOREIGN  BANK  STATISTICS.— 1.  Bank  of  France.  2.  Bank  of  England.  3.  National  Bank 
of  Greece. 

XV.  LEGAL  MISCELLANY.— Bank  Checks— Failure -Liability  of  Banks-Deposited  checks  need  not 
be  prepenled  for  pavmeni  the  dav  of  their  deposit. 

XVI  THE  PliOGRESS  <>F  BANKING  IN  GREAT  BRITAIN.— The  Bank  Act  of  1844— Failures  of 
18.57— Loans  to  Bill  Brokers— Forced  issue  of  £2,0i)O,(i00  Bank  Notes— Bank  Failures  in  Scotland— Crisis  in 
Ireland— Cris's  in  Liverpool— Continental  Banks-Price  of  Gold — Opiniims  of  Lord  (Jverstonr— Yearly 
average  of  Notes,  1844 — 1853— Evidence  of  .Messrs.  Keave,  Sampson,  Llovd,  Rodwell,  &c. — Failures  of 
ComiTiercial  Houses— Joint  ^lock  Banks— Fluctuations  in  Prices. 

XVII.  BANKING  IN  t^COTLAND.     [London  Tmies.] 

XVIII.  ON  MONKTARY'  PAMCS.—Oorrespondeuce  between  the  Hon.  Amasa  Walkek,  of  Massachu- 
setts,  and  Homer  Stansfield,  Esq.,  of  Burlev,  Kngland. 

XIX.  PLANTERS'  BANK  BONDS  OF  MISSISSIPPI.— Message  of  the  Governor,  18.59, 

XX.  HISTOKY  OF  TRIBUNALS  OF  CO.VIMERCE  OF  FRANCE,  HAMBURGH,  &c. 

XXI  ROBEHT  MORRIS,  THE  FIN  ANCIER.— Statement  of  the  Financial  Affairs  of  the  United  States 
from  February,  1781,  to  September.  17^9,  accompanied  with  a  statement  of  the  lax  assessed  on,  and  of  the 
amount  paid  by.  each  State,  under  the  res'>luiion  ot  Congn-sa  in  1781,  17S2— from  April,  1782,  to  September, 
1789.  By  MicuAEL  Nouese,  Esq.,  of  Washington  ;  with  a  biographical  sketch  of  Mr.  Mokeis,  by  J.  M.  San- 
derson, Esq. 

XXII.  ATTACHMENT  LAWS  AND  STATUTES  OF  LIMITATION  in  the  several  States  and 
Territories. 

XXI II.  A  SKETCH  OF  THE  HISTOPT  OF  BANKING  IN  TENNESSEE. 

XXIV.  THE  VALIDITY  (>F  COU>iTY,  TOWN  AND  CITY  BONDs  issued  to  Rail-Road  Corpora- 
tions, with  the  Interest  Laws  ot  ihe  Slate  of  Illuiois. 

XXV.  ALPHABETICAL  LIST  of  sixteen  hundred  Cashiers  in  the  United  States,  January.  1860. 

XXVI.  ANNUAL  REPORT  of  Ihe  Superintendent  of  ihe  Banking  Department  of  New  York,  Janu- 
ary, 1860. 

XXVII.  THE  BANKS  OF  CANADA,  January,  1860;  their  Managers,  Cashiers  and  Foreign  Agents; 
Capital.  Liabilities,  &c.,  of  each  Bank. 

XXVIII.  THE  BANKING  SYcTEM  OF  NEW-YOEK.— Review  of  the  Annual  Report  of  the  Bank 
Department  for  the  vear  1859. 

XXIX.  THE  HIGHEST  AND  LOWEST  PRICES  of  English  Consols,  Railway  Shares,  &c.,  each 
mouth.  1S59. 

XXX.  COMMERCE  AND  CURRENCY  OF  THE  UNITED  STATES.  (Fro7nthe  North  American 
/cevi  w,  for  January,  1>60.) 

XXXI.  ANNUAL  REPORT  of  Ihe  New-Eneland  Association  for  the  Suppression  of  Counterfeiting. 
XX.XIf.  ANNUAL  REPORT  of  Ihe  Director  of  the  Mint  on  the  Coinage  ot  the  U.  S.    January,  1860. 
XXXIIL  AN  EXAMINATION  OF  THE  THEORY  and  the  effect  ot  Laws  regulating  the  amount  of 

Specie  in  Banks.    By  Samuel  Hoopir,  of  Boston. 

j^~  Copies  of  the  above  volume  may  be  had  in  numbers,  price  $5  ;  orsubslanlially  bound  in  calf  backs, 
$5  50 ;  or  morocco  extra,  $5  75. 

J.  SMITH  HOMANS,  Jr.,  PUBLISHEE  BANKERS'  MAGAZINE, 

AVw-  York. 


STANDARD  WORKS  ON   BANKING, &.c, 

For  sale  at  the  office  of  the  Bankers'  Magazine,  No.  162  Pearl  St., 


I.  The  Fkee  "Banking  Laws  of  Massachusetts,  New  York,  Illinois,  Indiana, 
Iowa,  Louisiana,  Michigan,  Minnesota,  Missouri  and  Wisconsin;  -with  the  names  of  Bankers 
in  the  United  States,  Europe,  Asia,  Africa,  South  America,  West  Indies  and  Australia.  8vo, 
])!>.  290.     $1  25,  (or  by  mail,  postage  prepaid,  $1  50.) 

ir.  United  States  Customs  (Juide,  beinjr  a  Compilation  of  the  Laws  relating  to 
Registry,  Enrollment  and  Licensing  of  Vessels;  Entrance  and  Clearance  in  the  Foreign  and 
Coasting  Trade;  Navigation;  Commercial  Intercourse;  Entry  of  Merchandise  for  Consump- 
tion and  Warehousing,  <fec.  By  R.  S.  Axduos,  late  Deputy  Collector  of  the  Customs,  Boston. 
1vol.  12mo,  pp.  316.     $1. 

III.  TiiK  Ways  and  Means  of  Payment;  a  full  Analysis  of  the  Credit 
System,  witli  its  various  modes  of  Adjustment.  Comprising  Treatises  of  Money  of  Account, 
Money,  Coins,  Bullion,  and  Bullion  Banks;  the  Credit  System,  with  its  various  devices  of 
Books  of  Account,  Promissory  Notes,  Bills  of  Exchange,  Bank  Notes,  Bank  Deposits,  Credits 
in  Account;  the  Payments  of  the  Conmiereial  Fairs,  including  Copious  Notices  of  the  Banks 
of  England,  Scotland  and  the  United  States;  Clearing  Houses,  and  the  relations  of  these 
subjects  to  Interest,  Prices  and  the  Public  Payments.  By  Stepuex  Colwell.  1  vol.  8vo., 
pp.  (iGO,  $2  50. 

IV.  The  American  Numismatical  Manual  of  the  Currency  or  Money  of 
the  Aborigine?,  and  Colonial,  State  and  United  States  Coins;  with  historical  and  descriptive 
notices  of  each  coin  or  series.  By  Montrovillk  Wilson  Dickesox.  With  Engravings  of 
one  hundred  and  sixty  Gold,  Silver  and  Copper  Coins,  printed  in  various  colored  inks, 
making  the  engravings  perfect  fac-similies  (in  form  and  appearance)  of  the  originals.  1  vol. 
4to.  pp.  256.     f  6. 

*.;.;*  This  is  the  most  complete  work  ever  issued,  in  reference  to  the  Coins  of  the  United 
States. 

V.  A  Manual  for  Notariks  Public  and  Bankers — Containing  a  History  of 
Bills  of  Exch-inge;  Forms  of  Protest  and  Notices  of  Protest;  the  Laws  oif  each  State  in 
reference  to  Interest,  Damages  on  Bills,  <fec. ;  the  latest  decisions  upon  Bills,  Notes,  Pro- 
tests. &c.     1  vol.  octavo,  pp  220.     $2,  (or  by  mail,  postage  prepaid.  $2  25.) 

VI.  The  Cycloi'edia  of  Commerce  and  Commercial  Navigation;  with 
twenty  three  engravings  and  maps.  A  complete  exhibit  of  the  Finances  and  Commerce, 
Manufactures  and  Trade  of  all  Nations.  Edited  by  J.  Smith  Homans  and  J.  Smitu  Homans, 
Jr.     2  vols,  octavo,  1000  pp.  each.     $8. 

VII.  Historical  and  Statistical  Account  of  the  Foreign  Commerce  of 
the  LTnited  States  and  of  each  State,  for  each  year,  1820-1856;  The  Exports  to,  and 
Imports  from,  every  Foreign  Country,  each  year,  1820-1856 ;  Commerce  of  the  early 
Colonies;  Origin  and  Early  History  of  each  State.     Svo.,  pp.  200.     $1  50. 

VIII.  A  Manual  FOR  Consuls  ;  including  Regulations  prescribed  by  the 
President  of  the  United  States  for  Consular  Offices  of  the  United  States,  and  a  Preliminary 
Skelch  of  the  Consular  System.     $3. 

IX.  A  IIand-Book  OF  Criminal  Law,  alplicable  chiefly  to  Commercial 
Transactions.      By  W.  Campbell  Sleigh,  Esq.,  of  London.     12mo,  pp.  168.     $1. 

X.  The  Banking  System  of  the  State  of  New  York,  with  Notes  and 
'"  eiences  to  Adjudged  Cases:  including  also  an  account  of  the  New  York  Clearing  House. 
By  John  Cleaveland.     1  vol.  Svo,  pp.  360.     Price,  ^4.00. 

*g.*Tliis  is  the  only  \\ork  extant  that  gives  a  complete,  reliable,  and  lamiliar  exposition  of  the  past  and 
pit'tent  batfking  sytieiii  ol  tliis  State. 

XI.  The  Banks  of  New  York,  their  Dealers,  the  Clearing  House,  and  the 
Panic  of  1851.   With  a  financial  chart.    By  J.  S.  Gibbons.    1  vol.  12mo.,  pp.  400.    Price  $1  50. 

='^*  This  IB  the  only  publication  thnt  has  undertaken  to  give  a  comprehensive  sketch  of  the  banking  opera- 
tions of  New  York,  and  of  the  scenes  in  the  bank  parlor.  It  was  written  by  a  gentleman  who  for  years 
held  the  p(jst  of  cashier,  and  is  familiar  with  the  scenes  which  he  describes. 


DATE  DUE       2    893 

fiOV 

i  3  '70 

RECD  ^' 

FEB  ; 

\      71 

RECD  JAN 

1^-i 

OCl 

^  ^987 

REG'D  JU 

N  26  1987 

OCT 

7  1987 

GAYLORD 

PRINTED  IN  U.S.A. 

3   1970  00586  0470 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


AA    001  270  541    4 


'>."•.>:>'•. ».».'»i>;». 


